Pointmaker


This report from UK think tank the Centre for Policy Studies looks at the case against raising the minimum wage.

The Government is committed to raising the National Living Wage to two thirds of earnings, and extending it to cover those aged 21-25. The Office for Budget Responsibility was already forecasting that unemployment would rise by at least 50,000 due to planned minimum wage increases. But the pandemic makes the situation much worse, potentially extending this figure into the hundreds of thousands. The sectors worst-hit by the coronavirus – hospitality, retail, social care – are also those where the increased employment costs of a higher minimum wage are most likely to be felt. Lowering the age of eligibility to 21 will discourage firms from hiring young people at precisely the time when we should be doing everything we can to create new jobs and avoid the scarring effects of long-term unemployment. There will also be a significant cost to the public finances, of at least £2.4 billion. Given the overwhelming importance of creating and preserving jobs in the recession, the Government must put its planned NLW extension on hold to avoid increasing employment costs for the most vulnerable at the worst possible time.

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