The costs of employing young people entering the workforce have skyrocketed since Labour came to power, according to new analysis by the Centre for Policy Studies.
The research builds on earlier CPS analysis, which showed that Rachel Reeves’ first Budget made 2025 the most expensive year on record for businesses employing those on the minimum wage.
The increases to the National Living Wage, National Minimum Wage and Apprenticeship wages announced this week mean that trend will continue – with the changes disproportionately impacting younger and less experienced workers.
From April 2026, it will cost a business £25,852 annually to hire a full-time, minimum-wage worker over 21, up from £24,806 in 2025 and £22,438 in 2024. This is a 15% increase since 2024, or £3,414.
However, the increase has been even larger for 18- to 20-year-olds and apprentices. For someone aged 18-20 working full-time on the minimum wage, the cost has increased from £15,652 in 2024 to £18,200 in 2025 to £19,747 in 2026. This is a two-year increase of 26%, or £4,095.
For apprentices, the increase is from £11,648 to £13,741 in 2025 and £14,560 in 2026, also a two-year increase of 25%, and a cost of £2,912.
Even worse, much of this increase in cost is going not to the workers but to the Government. Those aged 21 and over will keep just half of the increase in labour costs via the higher minimum wage: the rest is taken in taxes.
Daniel Herring is Head of Economic & Fiscal policy at the Centre for Policy Studies. He was previously at the Legatum Institute, where he led work on the Institute’s Prosperity Index. He began his career at the New Zealand Treasury. He holds degrees in Law and Arts (majoring in Politics and Economics) from the University... View Article
