27th October 2026
The Government is expected to announce increases in the National Minimum Wage and National Living Wage in the Budget on Wednesday 28 October. However, younger workers are likely to continue receiving a lower hourly rate than those aged 21 and over, despite Labour's commitment to move towards equal pay for adults.
The reported proposals highlight a continuing dilemma for ministers. Raising wages helps workers cope with the cost of living, but increasing the cost of employing people can put pressure on businesses, particularly those that rely heavily on lower-paid staff.
What are the expected new rates?
The reported figures for April 2027 suggest that the National Living Wage for workers aged 21 and over could rise from £12.71 to £13.20 an hour.
For workers aged 18 to 20, the rate is expected to increase from £10.85 to £11.27 an hour. The rates for workers under 18 and eligible apprentices are also subject to the annual review, but their new figures should not be treated as confirmed until the Government announces them.
These are expected rates ahead of the Budget, rather than final statutory figures.
The proposed increases would amount to approximately 3.9% for both older and younger workers. However, the difference between their hourly pay would remain substantial.
Someone aged 20 earning £11.27 an hour would receive £1.93 less per hour than a worker aged 21 or over earning £13.20.
For an employee working 35 hours a week throughout the year, that difference would amount to around £67.55 a week, or £3,513 annually, before tax. Two people doing similar jobs could therefore receive significantly different annual incomes simply because of their age.
Why are younger workers paid less?]/b]
The lower rates are intended partly to help young people enter the labour market. Employers may be more willing to recruit someone with limited experience if the initial wage cost is lower.
This argument is particularly relevant to hospitality, retail and other sectors where businesses often employ younger staff. Pubs, hotels, restaurants and shops can operate on tight margins, and labour costs account for a substantial part of their expenditure.
Employers warn that increasing the minimum wage too quickly could make them more cautious about recruitment. Possible responses include reducing staff hours, delaying new appointments, increasing prices or investing in technology to reduce the need for workers.
However, there is another side to the argument. Young adults face many of the same living costs as older workers. Rent, energy bills, food and transport do not become cheaper simply because someone has not yet reached their 21st birthday.
A lower minimum wage can make it more difficult for young people to move out of the family home, save money or afford the costs of travelling to work.
There is also a question of fairness. If a 20-year-old and a 21-year-old carry out the same job, with the same responsibilities and productivity, should their legal minimum pay be different?
Employers can, of course, pay the same rate to both. The minimum wage establishes a legal floor, not a maximum, but some businesses will naturally use the statutory rates when setting pay.
[b]Labour's promise of equal treatment
Labour has committed to moving towards a single adult minimum wage, removing the distinction between older and younger adult workers. The reported proposals suggest that ministers are taking a more cautious approach to achieving that objective.
The difficulty is balancing the interests of young employees against the possibility that higher employment costs could reduce opportunities for them.
Youth unemployment and the number of young people not in education, employment or training are already concerns. But it would be wrong to assume that minimum-wage increases alone are responsible for these problems. Skills shortages, the availability of suitable jobs, transport, education and the wider state of the economy all play a part.
The Government must therefore consider not just how much young people are paid when they have a job, but also whether they can find work in the first place.
The implications for Scotland and Caithness
The debate has particular relevance to rural areas such as Caithness, where the range of available jobs can be more limited than in larger cities.
Small hotels, cafés, shops and other local businesses may have fewer opportunities to spread higher wage costs across a large workforce or a substantial customer base. Seasonal businesses may face additional pressures when they need to recruit staff for busy periods.
Employers could respond by increasing prices, accepting lower profits or reviewing staffing levels. Some may also reconsider whether to recruit inexperienced workers or offer the same number of hours.
For young people, the availability of a first job can be especially important. It provides income, experience and a route towards more secure employment. If employers become reluctant to recruit, the consequences may be felt most strongly by those trying to enter the labour market.
There is, however, an important counterargument. Better-paid workers have more money to spend locally. In communities where a large share of income is spent on everyday goods and services, higher wages can help support other businesses.
The overall effect will depend on how employers respond, how much additional income workers receive and the wider economic conditions.
The real test is whether young people can find work
Minimum-wage policy cannot be judged by the hourly rate alone. It must also be judged by its effect on employment, working hours and opportunities for progression.
A lower starting rate may help an employer take on an inexperienced worker. But if that worker remains on a lower rate simply because of age, despite doing the same job as an older colleague, questions of fairness remain.
One possible approach would be to move towards equal adult rates gradually, while improving access to training and considering targeted support for employers who recruit and develop young people. Any such support would need to be designed carefully to avoid subsidising jobs that would have been created anyway.
The Budget will show how the Government intends to balance these competing pressures.
For workers, the immediate question is how much more they will earn. For employers, it is whether they can afford the increase. For young people, perhaps the most important question is whether there will still be a job available when they leave school or college.
A higher minimum wage is of limited help to someone who cannot find work. But protecting jobs should not become a permanent reason for paying young adults less for doing the same work.
Sources for further reading: GOV.UK, National Minimum Wage and National Living Wage rates; Low Pay Commission, annual recommendations on minimum wage rates; and the UK Government's Budget announcement of 28 October 2026. Expected rates should be checked against the final announcement before publication.