The minimum wage should be abolished for under-18s, apprentices and people under 24 who have been out of work for more than a year, according to a leading think tank.

The Institute of Economic Affairs (IEA) says the move would make younger people more attractive to recruiters – and go some way to solving the unemployment crisis for 16-to-24 year-olds.

Around one million people in this age bracket are out of work, according to the latest government figures.

The report says the minimum wage is a “blunt instrument” given varying regional economies and diiferent pay levels. It is 70 per cent of the average hourly wage packet in Wales, but just 42 per cent of wages in London.

The report said the young person rate had also fuelled unpaid internship and zero-hours contracts, both of which are controversial and in some cases accused of being exploitative.

Mark Littlewood, director general at the IEA, said: “Youth unemployment is still precariously high and the best way to combat this is to make young, unskilled workers more attractive to employers.”

He added: “An ever increasing minimum wage creates a wealth of unintended consequences and the result is that among the group of people the measure aims to help, very few actually feel any benefit at all.”