2) Have lower marginal rates of taxation for lower level wages to embed in people the benefit of working harder from an early stage
Exactly - differing tax rates
2) Have lower marginal rates of taxation for lower level wages to embed in people the benefit of working harder from an early stage
100% agree with all of that.
Those needing the biggest incentives (and incentivising one thing can be done by disincentivising another!) are the longer term unemployed (including those who have never worked) and those on entry level wages.
So it is important to:
1) Make longer term unemployment less attractive relative to shorter term
2) Have lower marginal rates of taxation for lower level wages to embed in people the benefit of working harder from an early stage