51 FSB The gift sector is one built on creativity, retail and entrepreneurial spirit, and that spirit depends on a steady flow of new talent. However, too many young people have been locked out of work while small employers have struggled to bring them in – not because they didn’t want to, but because rising employment costs made each new hire harder to take on. Since the pandemic, youth unemployment has remained stubbornly high, with almost one million people in the UK not in education, employment or training - that’s 957,000 people or 12.8 per cent of 16- to 24-year-olds. Among 18- to 24-year-olds, the rate rises to 15.2 per cent, with 411,000 unemployed and a further 547,000 economically inactive. Those young people want to work, and small employers are the ones most likely to give them that chance. In fact, small employers are far more willing to take a chance on someone with a patchy CV or a health history. But rising employment costs have made hiring increasingly difficult. In April, the minimum wage for 18- to 20-year-olds rose to £10.85 an hour, pushing up the cost of employing a young person on that rate by 26% compared to January last year. A small employer with nine staff on the National Living Wage has seen annual employment costs rise by £25,850 between January 2025 and April 2026 – the equivalent of a whole extra member of staff. Our own research shows that five times more small employers cut their workforce in the last quarter of 2025 than increased it. That is why FSB has welcomed the Government’s new package, which is designed to ease some of these costs and give small firms the confidence to hire young people. From June, a new £3,000 Youth Jobs Grant will be available to businesses hiring someone aged 18 to 24 who has been on Universal Credit for six months. A £2,000 incentive will support SMEs in England taking on a new apprentice aged 16 to 24 from October, something FSB has long called for, given clear evidence from the pandemic that incentive payments for apprenticeships work. The Jobs Guarantee is also being extended from Autumn 2026 to cover all eligible 18- to 24-year-olds, giving them access to a fully funded six-month paid employment opportunity. This package gives small firms a clearer footing to hire, and gives young people a fair shot at getting into work and building a future. Youth unemployment remains stubbornly high – while small firms struggle to hire. FSB policy chair Tina McKenzie explores how rising costs created the gap, and whether new incentives can close it NURTURING TALENT ABOUT FSB As the UK’s business support group, FSB is the voice of the UK’s small businesses and the self-employed. Established over 40 years ago to help its members succeed in business, FSB is a non-profit making and non-party political organisation that’s led by its members, for its members. As the UK’s leading business campaigner, FSB is focused on delivering change which supports smaller businesses to grow and succeed. FSB offers members a wide range of vital business services, including access to finance, business banking, legal advice and support along with a powerful voice in Government. Each year FSB also runs the UK’s Celebrating Small Business Awards. More information is available at www.fsb.org.uk. You can follow us on twitter @fsb_policy and on Instagram @fsb_uk.
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