Young workers need freedom

Britain’s overregulated labour market is creating a lost generation of young people

Samuel Turner is a journalism student and freelance writer

Like many people, I spent holidays as a teenager and a student working in flexible low-paid jobs. They weren’t glamorous and didn’t offer much security, but they allowed me to make my own money and, more crucially, they gave me a way into the labour market as someone without any experience or skills.

As Sir Keir Starmer leaves office, the Employment Rights Act, passed on 18^th December 2025, is being touted as one of his legacy achievements. Yet, while the Act has been deceptively framed by Labour as giving workers more ‘rights’, what it has really done is hurt the people it claims to help.

The intention of the Employment Rights Act may have been to protect workers, yet the unintended consequence of it will prevent many young people from gaining crucial work experience. Burdensome regulations, such as day one paternity leave, ordinary parental leave, and statutory sick pay might on the face of it look beneficial to workers, but not if they make employers more adverse to hiring new workers, especially young people without previous work experience. Young people who are either working flexible hours or looking for a permanent job don’t want mandated employment benefits if it means we won’t be hired in the first place.

Other regulations, such as workers being given the right to sue their employer for unfair dismissal after 6 months on the job – reduced from 2 years – will only create a more legalistic market, where employers spend more time managing legal risk than creating employment opportunities.

One benefit of having a free labour market is that it allows young and inexperienced workers the chance to gain experience and skills. If the cost of hiring increases because of new employment rights, then it will be the youngest and least essential workers that will be laid off, or employers will simply hire less people.

Evidence shows that this is already a major problem. According to the government’s own data, from February to April 2026 there were 735,000 young people aged 16 to 24 who were unemployed, 109,000 more than the previous year. Additionally, from January to March 2026, there were 1.01 million people aged 16 to 24 who were not in employment, education, or training (NEET), 13.5 per cent of all 16-to-24-year-olds. This was the first time that the number of NEETs has exceeded 1 million since 2013.

There are likely a number of causes which are to blame for this, including a skills and education mismatch, minimum wage hikes, increased payroll taxes, and employment regulations. The Employment Rights Act 2025 is too recent to be the cause of increased youth worklessness. But it will likely make the problem a whole lot worse.

Once relatively free, Britain’s labour market has gradually become more regulated over decades. The Labour Party passed the original Employment Rights Act in 1996. This was followed by the National Minimum Wage Act 1998, Working Time Regulations (implemented from EU law), the Employment Act 2002, and the Agency Workers Regulations, all of which piled billions of costs onto businesses, which are then passed onto workers through smaller pay rises.

Another part of the Employment Rights Act, the ‘right to request’ flexible working hours, might sound liberating for workers, but by enforcing a one-size-fits-all mandate, the government could end up passing business costs onto the workers themselves through slower wage growth. With workers unable opt-out of these employment protections, they will effectively function as a ‘stealth payroll tax.’

Another unfortunate cost of employment regulations is that they make the UK less internationally competitive, driving away investment and jobs. If Britain is a less attractive place for investment, then fewer companies will expand, fewer entry-level roles will be created, and fewer training opportunities will exist.

Photo by Markus Winkler on Unsplash

Those in favour of stronger worker protections argue that workers do not always have equal bargaining power and are not genuinely free as a result. But for young people, just having the opportunity to work is more important than having secure employment. While experienced and highly skilled workers might benefit from stronger protections, younger and less experienced workers risk being excluded from the labour market altogether.

The Labour Party might think that it has won the argument on workers’ rights, but the evidence shows that it doesn’t have to be this way. The US has a much more flexible labour market than Britain. One advantage is that employers are more willing to hire. This might explain why youth unemployment in the US is 9.2 per cent, compared to 16.2 per cent in the UK. Spain, where youth unemployment sits at 23.5 per cent, demonstrates how overregulating the labour market can harm younger workers by discouraging firms from creating permanent jobs.

Britain’s overregulated labour market is creating a lost generation of young people who have lost confidence in their future opportunities. Rather than burdening businesses with even more employment regulations, a solution to increasing youth worklessness would be to cut the red tape and make hiring cheaper. Businesses want to hire more workers, but the state needs to get out of the way.

The main reason that this doesn’t happen is firstly because the Labour Party refuses to accept that its policies are economically damaging. If it finally realised that many of the problems facing the economy, such as youth unemployment, are a result of overregulation, then it would have to change course. But it doesn’t do so because that would require giving up their raison d’être, which is representing the interests of trade unions.