The government must invest in today’s youth to avoid a lost generation

Ben Fox argues the government must invest in the youth of today to avoid a lost generation.

Earlier this week the OECD released it’s “Off to a good start? Jobs for Youth” report, analysing how the financial crisis has hit the young harder than any other demographic group. The findings demonstrate the severity of the crisis in different countries and also the effectiveness of government stimulus measures taken in 2009 and the first two quarters of 2010 to combat the worst effects of the recession.

The OECD figures seem to bear out Labour’s claim that the stimulus measures used by the UK between 2008 and 2010 kept a lid on youth unemployment levels relative to other OECD and EU countries, and particularly other countries who suffered from an over-reliance on the property and financial sectors. For example, Spain, Ireland and the United States have all seen youth unemployment increase dramatically – particularly Spain and Ireland where the rates have gone from just under 20% to 40% for Spain and from under 10% to 30% in Ireland. The youth unemployment rate in the UK increased by 4.8%. 

Percentage of youth 15-29 having left education in selected European countries, 2005-07

Of the OECD countries, Britain is in the upper mid-table. Germany and Austria are the only countries where youth unemployment has actually fallen since 2007, but that can be explained by the stronger than average growth in those countries this year and also their well-established apprenticeship and vocational training programmes.

However, the data also reveals a huge problem for Britain’s youth. At 18.9%, the unemployment rate for 16-24 is still more than double the national average of 7.9%. Moreover, the employment rate of 16-24 year olds in the UK has fallen from 52.1% in 2009 to 47.1% in Q3 of 2010, compared to a 2% fall in the EU and a 1.6% drop in the rest of the OECD. This compares poorly with the national employment rate in the UK of 70.6%.

Elsewhere, the unemployment rate as a proportion of the labour force is 18.9% according to the OECD, the same as at the start of 2009, compared to a slight increase in the EU and the OECD. This, however, still leaves the UK youth unemployment rate at 0.4% higher than the OECD average. Since Q3 of 2007 when Northern Rock collapsed, the UK has actually kept youth unemployment lower than the OECD average and the 21 EU countries in the OECD.

Bearing in mind that these OECD figures only go up to Q3 of 2010 when the stimulus measures taken by most OECD countries in 2008 and 2009 are starting to end, a future of austerity and further job losses would very probably hit those aged 16-24 harder than the rest of the labour force.

So, what’s the solution? Given that the government’s own Office of Budgetary Responsibility, the OECD and the IMF are predicting sluggish growth and rising unemployment in Britain in 2011 and 2012, our young people are in grave danger of being left behind. The Coalition would be foolish to ignore the advice of the OECD and the success of the likes of Germany and Austria. More investment for apprenticeships and vocational training is a no-brainer. It doesn’t require significant investment but creates a more skilled and diverse work-force. Similarly, the government should provide economic incentives to companies to hire young people, particularly those who have completed or are completing apprenticeship schemes.

Youth unemployment should be one area where stimulus measures should continue to be made regardless of the economic circumstances, especially since the number of people aged over 40 is now higher than the proportion that are younger. This demographic shift is unlikely to get any change in the short to medium term future.

In short, Labour was not the best performing government in tailoring policies to safeguard its young people, but it had a better record than most. The Coalition should not abandon Labour’s policies, but develop and expand them to safeguard our next generation.

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