Young people have never been so disadvantaged in the labour market

The government urgently needs to improve its youth welfare and training schemes

Yesterday’s labour market statistics show more good news, particularly around pay.

Regular wages (i.e. excluding bonuses) were up 2.7 per cent. This is the highest growth in over six years and hopefully confirms that workers are getting some much-needed relief after years of wage restraint.

One group that have not been as successful during the recent jobs boom are the young unemployed. After peaking in late 2011 at 22.5 per cent, the youth unemployment rate has fallen to 16.2 per cent in the latest data, but remains well above its pre-recession level.

The truth is that issues around the ‘youth transition’ from education to work have been around for more than a decade. Looking at the ratio of the 16-24 youth unemployment rate (chart below) to that of 25-64 year-olds tells us how young people are doing compared to older adults.

What we see is that from the early 1990s right up until the recent recession, the position of young people in the labour market worsened steadily.

ippr graph

(click to enlarge)

Just as worrying is the fact that young people have not on the whole benefitted from the recent rapid jobs growth.

In fact, today’s data sets a new record; since comparable data began, young people have never performed as poorly relative to older adults, with the youth unemployment rate more than three times as high as the unemployment rate for 25-64 year-olds.

If even an economy adding historically high numbers of jobs can’t make significant in-roads into youth unemployment, what else can be done?

First, we need to understand why young people have been finding it more and more difficult to get a job over the last twenty years.

The reasons are complex, and include poor support from the further education system for those not going to university, and a welfare system that did little to respond to the particular needs of young people, instead treating them largely the same as older adults by following an extreme ‘work-first’ approach to support.

There are two strands to the new government’s response. The first is a plan to introduce a new requirement for young people claiming Jobseeker’s Allowance for over six months to participate in compulsory community service or face losing their benefit.

At IPPR we have significant reservations about whether this approach will work. There is a risk that such harsh treatment of long-term unemployed youth, many of whom live in labour markets with relatively few job opportunities, will cause significant numbers to dis-engage entirely from support.

This relates to a second problem; many young people not in education, training or employment (NEETs) are not claiming unemployment benefit at all.

Real reform of youth welfare would see more of their number brought into a system of support that is less concerned with sanctions and unpaid work, and instead works closely with young people to develop a career and training plan appropriate to each individual, with a backstop of guaranteed work paid at the minimum wage.

The second angle taken by the new government is to pledge the creation of 3m new apprenticeships. But as my colleague Luke Raikes recently showed, two-thirds of recent apprentices were already working for the company where they are training, meaning little is being done to support the young unemployed into a job.

What is more, two-fifths were over the age of 25. While training for older adults is vitally important, it should not come at the expense of school leavers securing much-needed training places.

In addition, it is likely that the wider Further Education (FE) budget is going to face significant cuts in the next spending review, further limiting the options for young people who are not on an education track leading to university. Better targeting of apprenticeships and other training opportunities is needed.

As the chart above shows, young people have never been as disadvantaged in the labour market as they are now. While the government is promising significant reform of the training and youth welfare systems, in both cases it needs to revisit and improve its proposals, or else risk young people continuing to be shut out of jobs.

Spencer Thompson is senior economic analyst at IPPR. Follow him on Twitter

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7 Responses to “Young people have never been so disadvantaged in the labour market”

  1. swat

    Introduce National Service so that every youngster gets to do engineering and mechanics and survival training., and learning to work together as a team. After 2 years they’ll come out a lot maturer and a bit more balanced with the necessary skills.

  2. Torybushhug

    LBC Radio were talking to an Eritrean lad this morning who said his reason for fleeing to Europe was to escape his nations national service.

  3. GhostofJimMorisson

    First, we need to understand why young people have been finding it more and more difficult to get a job over the last twenty years.

    Having to compete against an army of Eastern Europeans probably hasn’t helped! When I left school in the late ’90s, there were dozens of agricultural jobs in my local area. Low skilled and low paid, but jobs nonetheless and ideal for youths with few qualifications and work experience. Today, those jobs aren’t even advertised. Apprenticeships are in abeyance, as employers can ship in experienced EU migrants rather than train young people. Our poorly educated young are being left on the scrapheap.

  4. Verity

    It may be hard for the liberal Left to admit (given their prejudiced pro – EU at any cost stance taken) but it is difficult to see how the marginally qualified British young person is able to compete against the ambitious go-getters who jump the queue over the non – EU world by capturing the employers bargain of ‘few complaints’ and ‘compliant commitment’ will secure you the place. Of course those from Eastern Europe who have already spent time in the labour market will win out against some British young people who have not served time and may also be slightly demoralised and lacking the go-getting spirit. So what should the enterprising business manager do? Obvious go for the go – getters and leave the social consequences for the liberal left to address.

  5. Ger

    And with the 100.000.000 coming from the third world things are really on the up,can’t wait for the future.

  6. David Davies

    It is no fun being over 50 and unemployed, subject to `assessments’ by teenaged gangmasters who appear to require 20 somethings with 30 years’ experience – when they are not farting about on Linked In.

  7. HaroldTPennington

    ….Some time hit the leftfootforward Find Here

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