Milburn Review Warns of ‘Lost Generation’ as Youth Minimum Wage Faces Scrutiny
A major inquiry lead by former Health Secretary Alan Milburn is set to review the future of the youth minimum wage amid growing concerns over rising youth inactivity in Britain.The social mobility expert cautioned that failure to address “uncomfortable truths†about the labor market risks creating a “lost generation†of young people, potentially fueling social unrest and a shift in political allegiances.
Rising Inactivity and the Welfare State
Milburn,in an interview,emphasized the unsustainable nature of the rising welfare bill,stating it is “unsustainable fiscally and economically.†Though, he stressed that any reform must prioritize addressing social injustices.The review comes as economists increasingly warn that recent increases in youth minimum wage rates — aimed at equalization with adult rates — could inadvertently “price out†young people from entry-level employment opportunities.
This intervention is particularly sensitive given Labor’s commitment to eliminate lower minimum wage rates for younger workers, ensuring all adults receive the same legal pay floor. The party’s stance has drawn criticism from some within its own ranks, and also from unions.
Andrea Egan, the incoming general secretary of Unison, recently warned the Labour party against supporting politicians who act against the interests of workers, stating she would “call time on our union’s inexcusable habit of propping up politicians who act against our interests, undermine our fundamental values, and make our lives worse.â€
A Turning Point for Labour?
As Keir Starmer’s Labour party navigates challenging poll numbers, Milburn believes a focus on improving young people’s prospects could revitalize their political fortunes. He argues that transforming opportunities for this demographic is key to generating hope for the future. However, he warns that inaction could lead to a generation reliant on benefits and a potential drift towards right-wing populism.
Milburn launched his review earlier this week, focusing on the reasons behind the fact that a quarter of 16- to 24-year-olds are currently not in education, employment, or training. He described the current youth labor market as facing a “perfect storm†following the Covid-19 crisis, exacerbated by decades of systemic failures and policy neglect in both education and welfare.
“You write off a generation, you write off the country’s future,†Milburn asserted. “We’re plunging young people into a lifetime on benefits, rather than creating an upward escalator, with opportunities for people to learn and to earn.â€
radical reform on the Horizon
The former cabinet minister indicated he is prepared to reccommend radical reforms in his final report,due this summer. This includes examining pressures on employers and the increasing number of mental health claims. Concerns about the impact of increased youth minimum wage rates were also raised by Treasury insiders prior to the recent budget, fearing potential job losses for entry-level positions.
“We’ve got to look very carefully at exactly that,†Milburn said. “We’ve got to make sure that in a fragile youth labour market… public policy is providing the right incentives for employers to employ more young people, rather than less.†He acknowledged hearing concerns that businesses are facing increased financial strain due to recent national insurance increases, stating he will “examine the evidence, and we will reach a conclusion.â€
Mental Health and the Benefits System
Milburn also intends to address the sensitive issue of youth mental health, which he cites as a contributing factor to the rise in sickness benefits. He cautioned against automatically placing individuals with anxiety or depression onto benefits, emphasizing that “good work… is extremely good for people’s mental health.†He acknowledged the need to confront “uncomfortable truths,†including the potential for a shift in perception where work is seen as detrimental to mental wellbeing.
A clinical review of mental health condition diagnoses in England, ordered by Health Secretary Wes Streeting, will inform milburn’s review. Though, Milburn emphasized that 16- to 24-year-olds represent a “generation under duress,†facing a drastically different landscape than previous generations who benefited from a now-broken “social transaction†with the state.
Adapting to Technological Disruption
Milburn stressed the need for government and businesses to proactively prepare young people for the “tomorrow’s potential tsunami†— the rapid advancement of technology — which threatens to further disrupt the youth labor market. He argued against resisting technological progress, stating, “You can’t simply say, King Canute-like, we’re going to resist the forward march of technology.†Rather, he advocated for equipping young people with the adaptability, agility, and resilience needed to thrive in a changing world.
With Labour experiencing declining support among younger voters,disillusioned by perceived generational inequality,Milburn warned of a potential shift towards parties like Reform UK. “If young people start feeling society isn’t interested in me… then there’s an obvious quid pro quo,†he said, suggesting a potential realignment of political allegiances. He cautioned that this breakdown of the “social contract†should be a concern for those committed to progressive politics.
Milburn, a close associate of potential Labour leader Wes Streeting, urged the government to adopt a more optimistic outlook. “The center-left of politics only wins when it creates a sense of possibility about the future,†he said. “This [review] is about saying the future can be better than the present and better than the past.â€
Pat McFadden, the work and Pensions Secretary, is planning further welfare reform next year, following the abandonment of a meaningful portion of a previous bill due to opposition from Labour MPs. Milburn, whose review will report to McFadden, criticized the government’s previous approach to welfare reform, stating that framing it as a cost-cutting measure was counterproductive. “If you want to reduce welfare bills, the only way of doing that is to provide more opportunities for people to learn and to earn first.â€
