The Institute of Directors has called on the government to slow the implementation of the Employment Rights Act and pause plans to equalise youth and adult minimum wage rates, after reports that publication of the Milburn Review into young people and work is to be delayed.
Anna Leach, chief economist at the IoD, said the reported delay to the review, led by former health secretary Alan Milburn, was “disappointing, but understandable”.
She said: “Suggestions that it will recommend an increase in funding for welfare, albeit framed as an investment with a future payoff for young people, would sit uneasily alongside a Budget likely to further increase the tax burden on investors and employers to plug an expected gap in the public finances.”
The IoD was responding to reports of a delay. Its statement did not give a revised publication date for the review.
The review was commissioned by the Secretary of State for Work and Pensions. Its interim report, published on 28 May, found that 957,000 people aged 16 to 24 were not in education, employment or training at the end of 2025. Mr Milburn wrote in that report that a final report, setting out “what a coherent participation system for early adulthood should look like”, would follow later this year.
Leach said measures to help young people into work had the backing of employers but needed to be matched by demand for staff.
“Action to support pathways for young people into work is critical and has strong support across the employer community,” she said. “But the policy response must look holistically at both supporting young people into work and ensuring that there are jobs available for them.”
She said the first Milburn report had noted that young people had become disproportionately more costly to hire in recent years. Since 2019-20, the minimum wage rate for young workers has risen by between two thirds and three quarters, compared with 55 per cent for other workers, according to the IoD’s account of the report.
“Meanwhile the Employment Rights Act continues to add further cost and risk to employment,” Leach said.
In the interim report, Mr Milburn wrote: “Taking on a young person is always a risk for an employer, precisely because they are unproven. If public policy aims to increase youth participation, it has to minimise risks and maximise incentives.”
Leach said welfare changes alone would not be enough. “Without sufficiently powerful action to address weak demand for entry level workers, we risk simply shifting young people around the benefits system rather than out of it,” she said.
“If changes to the benefits system warrant further time for consideration, the same should apply to policies affecting employers’ willingness to hire. That means reconsidering the design and implementation of the Employment Rights Act, as well as the intent to equalise the minimum wage for young people with the adult rate.”
She added: “We therefore continue to call for the implementation timetable for the Employment Rights Act to be slowed, and for a pause and reconsideration of the decision to equalise youth minimum wage rates with adult rates.”
Ministers have previously defended both policies. When retailers warned in March that the act could reduce flexible and entry-level roles, a government spokesperson said: “The Employment Rights Act will boost employment and improve job security for over 18 million workers, with young people among the biggest winners.”
The spokesperson said at the time that the act “will not mean businesses have to reduce their flexible roles”.
On pay, Angela Rayner, as Deputy Prime Minister, asked the Low Pay Commission in August 2025 to draw up proposals to close the gap between the minimum wage for 18 to 20-year-olds and the rate for those aged 21 and over. She described that remit as “the next milestone in our plan to get more money in working people’s pockets”.
