MPS have urged the government to cut employer National Insurance (NI) contributions for all under 25s, warning that rising unemployment costs are limiting job opportunities and training for young people.
The Work and Pensions Committee said it had received “overwhelming evidence” that higher employer NI rates are putting businesses off hiring, especially in sectors that traditionally employ younger workers such as retail and hospitality.
More than one million 16 to 24‑year‑olds are currently not in education, employment or training (NEET), a figure the committee described as a “travesty”.
The committee also pointed out inconsistencies in the current system. Employers don’t pay NI for staff under 21 or apprentices under 25 unless they earn above £50,270 yet must pay 15 per cent NI on anything they earn above £5,000 for non‑apprentices aged 21–24. MPs say this gap completely undermines government efforts to improve employment rates for this age group.
They also pointed to findings from former minister Alan Milburn’s review into youth unemployment, which reported that the government spends 25 times more on benefits for young people than on supporting them into work.
Sheila Flavell CBE, COO of FDM Group, commented, “Recent conversations around graduate employment focus on whether people have jobs but not actually on whether they have the right jobs. Underemployment is a growing threat for the UK labour market. We have capable, ambitious graduates working in roles well below their skill level, and that is a waste of talent on a national scale.”
“What’s missing is a practical bridge between education and industry. ‘Earn while you learn’ models and structured, industry-led training give graduates the chance to build real-world experience and move into long-term careers matched to their skills.”
The committee welcomed early steps to prioritise work and training for 18 to 24‑year‑olds but said further action is essential to prevent long‑term harm.
