Fixing the youth unemployment crisis

Nov 17, 2020 | Sector & policy | 0 comments

The impact of Covid-19 on youth employment and the policy solutions that will make the most difference were discussed in a recent ISE webinar. Samantha Windett, Director of Policy at Impetus and Chair of the Youth Employment Group explains.

News of a Covid-19 vaccine is music to the ears of all of us, as we navigate yet more restrictions on our everyday lives. For young people suffering the brunt of the economic damage, it can’t come soon enough.

Latest ONS figures show a surge in the UK unemployment rate, with redundancies at a record high in the three months to September. The biggest rise in those out of work was among 16 – 24 year olds.

This year’s annual Student Recruitment Survey showed that Covid-19 has forced employers to reduce graduate jobs by 12%.

This is not entirely surprising since we know that young people fare the worst in recessions, and in this one they are 2.5 times more likely to work in sectors most vulnerable to shut downs, like hospitality, retail and the arts.

The turbulence caused by Covid-19 means many young people will have been hit by ‘last in first out’ redundancy policies, or work on temporary contracts. And that’s not to mention the more than 700,000 young people already not in education, employment or training (NEET) before the onset of this crisis.

The sad reality is that the impact is likely to continue to be disproportionately felt by young people as long as the crisis lingers.

 

Why youth employment matters

The move from education into work is a critical one and has an enormous bearing on an individual’s life chances.

Resolution Foundation research shows that even a short period of unemployment can be felt decades later through stunted careers. People starting out in the midst of a downturn experience a reduction in real hourly pay of around 6% one year after leaving education. Compared to people who left education in better economic conditions, their wages do not recover for up to six years.

Impetus’ Youth Jobs Gap research shows that, historically, young people from disadvantaged backgrounds are twice as likely to be out of the job market than their better-off peers.

For those already NEET, many of whom will have been out of work for a year or more, the prospect of finding employment in this climate will seem even more remote. This group of individuals needs more intensive and targeted support if they are to engage with opportunities in and around the labour market.

The scale of the issue cannot be underestimated. The downturn is affecting hundreds of thousands of young people. Latest figures show that the number of 16 to 24 year olds in employment dropped 174,000 over the last quarter to a record low of 3.52 million. To put this in context, that’s nearly three times the drop seen in the whole 35 – 64 age group. The Resolution Foundation warns that youth unemployment could potentially rise to one million. The situation must be turned around now.

 

What needs to be done

Credit where credit’s due: the government has prioritised youth employment and made efforts to address it in their announcements earlier this year, but it must go further.

A goal would be for the Opportunity Guarantee for young people, announced by the Prime Minister back in June, to ensure that all 16 to 24 year olds have the choice of a good quality education place, training or job. We need to revisit that promise and use the upcoming Spending Review to correct the gaps in it that remain.

Only by providing that certainty to young people can we meet their expectations and potential, and help build a generation that will thrive despite the current setbacks. The Youth Employment Group has put forward comprehensive proposals on what it would take to fulfil on this pledge and is calling for 1000 additional opportunities in education, employment and training to be created every day.

There’s a lot of work to do to make sense of the options available for young people and employers, but having them there is a good start.

The additional support for young jobseekers – including the increase in the Flexible Support Fund available and the number of Work Coaches – are much needed, but support will only be successful if it is targeted and tailored.

The government’s initiatives need to reach those young people who don’t tend to go to jobcentres or claim benefits, extending support to those at risk of falling through the gaps in the system. There should also be a focus on encouraging entrepreneurship and self-employment amongst young people and what works in supporting that to happen.

The government’s flagship Kickstart scheme, and support for apprenticeships and traineeships, are positive steps if we can get them right. Kickstart’s priority must be the creation of quality placements and support for young people, and it’s important we keep sight of the real aim of getting young people at risk of long-term unemployment into sustained work.

Part of the challenge will be ensuring the varying schemes all fit together for employers and young people. Then there needs to be flexibility to evaluate and improve the scheme to maximise its effectiveness and ensure the learnings benefit the design of future schemes.

 

Looking to the future

It is a challenging time for many young people, but as government considers where and how to invest over the next year, we should be confident that, with the right support, all young people can succeed in work.

It isn’t just a priority to these individuals, but also to their families, communities, the health of our economy and the prospects of future generations.

 

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