News & Events

Rising Wage Costs Could Hit Youth Jobs in Manufacturing

Phil Black - PII Editor 40 minutes ago

26 1 minute read

Nearly four in ten manufacturing workers have received or will receive a pay rise as the 2026 National Living Wage ripples through pay structures.
One in three manufacturers have already raised prices to absorb higher wage costs, with limited room to pass on further increases.
Firms are responding by automating more processes, cutting overtime and restructuring workforces, putting pressure on job creation.
Make UK warns sharp rises in youth and apprentice rates could make it harder for employers to help tackle the UK’s growing NEETs crisis.

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Manufacturers are sounding the alarm that any further sharp hikes in minimum wage rates could worsen the already intense cost pressures they face, making it even tougher to create the jobs and training opportunities essential for tackling the UK’s growing NEETs crisis.

This caution comes on the heels of Alan Milburn’s independent review on Young People and Work, which has shed light on the magnitude of the issue. Nearly one million young people aged 16 to 24 are currently not engaged in education, employment, or training, sparking fears that the UK might be on the brink of a “lost generation” unless we establish stronger pathways into the workforce.

Make UK emphasizes that wage policy needs to find a middle ground—supporting fair pay while also preserving the entry-level jobs, apprenticeships, and workplace training opportunities that young people rely on to kickstart their careers in the industry.

Minimum Wage Increases Add to Manufacturing Costs

The National Living Wage (NLW) saw a 4.1% increase to £12.71 in April 2026, with the rate for workers aged 18 to 20 jumping by 8.5%. Meanwhile, apprentices and those aged 16 to 17 experienced a 6% rise.

According to Make UK’s findings, while not many manufacturing employees are directly paid at the wage floor, these increases ripple through company pay structures as employers strive to maintain wage differentials and navigate union negotiations.

Survey data from Make UK reveals that 39% of workers in UK manufacturing firms have either received or are set to receive a pay rise due to the new National Living Wage rate in 2026.

In response to the rising costs associated with the National Minimum Wage and National Living Wage, manufacturers have taken various actions. About a third have raised prices, 27% have turned to automation for more processes, and 20% have cut back on overtime. Additionally, 18% have either reduced or restructured their workforce, while 17% have scaled back on overtime or shift premium pay.