Employers have warned that moving too quickly towards a single adult minimum wage rate could reduce opportunities for young people entering work, according to a new survey by the Recruitment and Employment Confederation (REC), published ahead of the Low Pay Commission's recommendations to the government on minimum wage rates later this month.
The government has set out an ambition to move towards a single adult rate for all workers aged 18 and over. In the REC's survey of 235 employers across the UK, almost half (48%) said they would face higher costs if the pay gap between younger workers and those aged 21 and over narrowed further. Only 13% expected a positive effect, while 39% said it would have no impact on their organisation.
Entry-level roles and training at risk
Asked how further narrowing could affect their workforce decisions, 29% of employers said it would raise the cost of investing in training and development for younger workers, 25% the cost of retaining existing young workers and 22% the cost of offering apprenticeships. Around one in five (21%) said it would push up the cost of creating entry-level roles and of recruiting 18 to 20-year-olds, and 18% the cost of offering work experience placements.
The REC says it supports better pay for younger workers, but warns that if increases outpace what employers can absorb, the unintended consequence will be fewer entry-level opportunities, apprenticeships and routes into work.
Shazia Ejaz: 'Not a disincentive to hire'
"The National Minimum Wage must not become a disincentive to hire younger jobseekers," said Shazia Ejaz, Director of Campaigns at the REC. "If the cost of employing younger workers rises too quickly, some employers will inevitably create fewer entry-level roles, apprenticeships and training opportunities."
"Better pay for young people is an important objective, but policymakers must ensure that rising wage floors do not unintentionally reduce the number of opportunities available to those taking their first steps into work. For firms already managing higher wage bills, increased National Insurance contributions and wider regulatory costs, there is a genuine concern that some entry-level opportunities could become harder to sustain."
A separate REC survey of 237 employers carried out with Whitestone Insight in June found that more than 71% said minimum wage rises over the past three years had pushed up business costs. Among those affected, 27% had reduced recruitment or headcount, 26% had scaled back expansion or investment plans and 21% had held back pay rises for other staff.
A fragile recovery
The latest REC and KPMG Report on Jobs showed permanent placements and temporary billings both rising marginally, with vacancies falling at the softest rate since August 2024. But employer confidence in hiring and investment decisions has remained in negative territory since mid-2025.
Shazia Ejaz said: "The labour market is showing some early signs of improvement, but confidence remains fragile. The Low Pay Commission and the government should continue to take a cautious, evidence-led approach that protects both pay growth and job creation."
