The UK government will provide businesses with a £3,000 bonus for hiring young people who have been unemployed for six months, Work and Pensions Secretary Pat McFadden announced on March 16, 2026. The measure aims to address youth unemployment, which has reached its highest level in 11 years.
Youth Unemployment Rates and Government Response
Government statistics from September to November 2025 show that 729,000 people aged 16 to 24 were unemployed, representing 15.9% of the youth population—an increase from 14.4% the previous year. Additionally, 946,000 young people (12.7% of those aged 16 to 24) were not in employment, education, or training from July to September 2025. McFadden described youth unemployment as a long-term problem that has persisted for over 15 years and emphasized the need for targeted government intervention.
Details of the Employment Incentives
Alongside the £3,000 hiring bonus for employing long-term unemployed young people, small and medium-sized businesses will receive a £2,000 bonus for taking on young apprentices. The government also plans to expand subsidized jobs with training to include 22 to 24-year-olds. McFadden highlighted the intent to improve prospects for young people by supporting businesses that hire them.
Policy Context and Criticism
Some businesses attribute rising youth unemployment to recent government policies, including increased national insurance contributions and minimum wage hikes for young workers. In February 2026, Bank of England Chief Economist Huw Pill suggested tax and wage policies under the current government contributed to higher youth unemployment. McFadden countered by noting that employers are exempt from national insurance contributions for workers under 21 and defended the minimum wage increases, stating they ensure fair pay and are set by the independent Low Pay Commission. He stressed that historic lack of effective support programs has contributed to youth unemployment challenges.
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