UK minimum wage is raising youth unemployment, Bank of England’s Mann says

[LONDON] A sharp rise in Britain’s minimum wage for younger workers over the past three years has contributed to an increase in unemployment for that age group, Bank of England policymaker Catherine Mann said in a newspaper interview on Sunday.

The unemployment rate for 18-24 year olds in Britain was 13.7 per cent in the three months to November, up from 10.2 per cent three years earlier and its highest since the fourth quarter of 2020.

Over the same three-year period, unemployment for the whole workforce has risen to 5.1 per cent from 3.9 per cent.

Speaking to the Sunday Telegraph, Mann said she believed the rise in youth unemployment reflected disproportionately big increases in the minimum wage for that age group, rather than being a leading indicator for a broader rise in unemployment.

“I think we have to be very careful in the storyline about youth unemployment being the canary in the coal mine for a deeper deterioration in the labour market,” she said.

“The accumulation over three years of the rise in the National Living Wage for that group has been manifested in unemployment for that category of workers. Very unfortunate, but it is true. It is a fact,” she added.

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Britain’s minimum wage rate for 21-22 year-old workers has risen by 33 per cent over the past three years to bring it in line with the £12.71 (S$22) hourly National Living Wage paid to older workers, while the rate for workers aged 18-20 has risen 46 per cent to £10 an hour.

Britain’s government has said it wants to bring the minimum wage paid to 18-20 year-old workers in line with older workers too.

Mann is a former chief economist at the Paris-based Organisation for Economic Co-operation and Development and voted against the BoE’s last three rate cuts due to concerns about inflation. REUTERS