Young people are bearing the brunt of rising unemployment as tax hikes and inflation-busting increases in the minimum wage cost jobs, according to Labour‘s favourite think tank.
In a bleak report published on Monday, the Resolution Foundation said the £25billion national insurance tax raid on business in April has helped drive unemployment to a four-year high of 5 per cent.
And warning that ‘the outlook for unemployment remains uncertain’, the think tank called for increases in the minimum wage to be slowed ‘to avoid pricing 18-20-year-olds out of work’.
The comments came just days after Burger King warned that steep increases in the minimum wage – on top of tax hikes – will have a ‘significant’ impact on the hospitality sector.
The Resolution Foundation report will make tough reading for Labour given the think tank’s links to the government.
Pensions minister Torsten Bell ran the group before becoming a Labour MP while Treasury minister Dan Tomlinson was its senior economist.
Rachel Reeves also recently poached Emily Fry from the foundation to become an advisor.
In a separate report published on Monday, the Recruitment and Employment Confederation (REC) said businesses slammed the brakes on hiring ahead of last month’s Budget as speculation over tax hikes and worries about the new workers’ rights bill took their toll.
In a bleak report published on Monday, the Resolution Foundation said the £25billion national insurance tax raid on business in April has helped drive unemployment to a four-year high of 5 per cent
The REC said there were just 622,156 new job postings in November – down 14..4 per cent from October.
‘Hiring momentum weakened sharply in November as employers slowed recruitment ahead of the autumn Budget amid heightened speculation on tax rises, and the finalising of Employment Rights Bill,’ the report said. ‘This led to broad declines in job postings across every region.’
Official figures will show where unemployment stood at the end of October having already risen from 4.1 per cent to 5 per cent under Labour.
The update will come after the Office for National Statistics last week revealed the economy shrank by 0.1 per cent in October having not grown in any month since June.
With UK inflation still the highest among the Group of Seven major developed nations, the Chancellor is facing fresh questions over her handling of the economy.
The Resolution Foundation said ‘young people are bearing the brunt of Britain’s jobs downturn’ with the number of 18 to 24-year-olds in work falling by 1 per cent since the election.
By contrast, the number of 25 to 49-year-olds in work is down by just 0.2 per cent.
The national insurance tax raid – which has been dubbed a ‘tax on jobs’ and breached the Labour Party manifesto – was the centre piece of Ms Reeves’ first Budget last year.
Last month’s Budget saw the national living wage for those aged 21 and over jump to £12.71 an hour from April 2026 having risen from £11.44 to £12.21 earlier this year
But the subsequent increase in running costs for businesses has been blamed for pushing up unemployment and prices.
The Chancellor has also overseen two inflation-busting increases in the minimum and living wage – piling further pressure on employers.
Last month’s Budget saw the national living wage for those aged 21 and over jump to £12.71 an hour from April 2026 having risen from £11.44 to £12.21 earlier this year.
But that 11 per cent rise has been dwarfed by an 26 per cent hike in the minimum wage for 18 to 20-year-olds from £8.60 an hour to £10 in April this year and to £10.85 next year.
‘The Government should redouble efforts to support young people into work,’ said the Resolution Foundation. ‘This should include slowing the pace of minimum wage rises to avoid pricing 18-20 year olds out of work.’