The long view of youth unemployment
by Matt Grist
Our report on the youth labour market – Youth Labour’s Lost – is published today. In it we try to look beyond the recession to Britain’s long-term problem with youth unemployment (youth unemployment as a share of total unemployment has been rising since the mid-1990s). This is not to deny there is a very serious short-term problem caused by economic stagnation. It’s just that fixing the economy is not a youth-specific problem, even though low growth affects youth employment more adversely than the employment of older workers.
Young people are adversely affected by economic slowdown due to their facing a ‘natural’ penalty in the labour market: that of lacking experience and being the ‘last hired, first fired’. This penalty itself cannot be removed for obvious reasons. But it can be reduced by a comprehensive set of policy changes designed to mitigate its effects.
The first policy shift needed is to stop misunderstanding the problem: measurements of ‘NEETs’ are grossly inaccurate, piling together gap year students and young parents with the unemployed as well as those who should be in education. When the rise in participation age to 18 comes in 2015, 16-18 year-olds will not be NEET anyway. Hence we recommend that the Government stop measuring NEETs altogether: those who are 18 and below are truanting and those above are simply unemployed or economically inactive. Let’s stop creating moral panic over an army of NEETs that does not really exist. Moreover, it is not helpful to label an unemployed 18 year-old ‘NEET’, with all the negative connotations, when he or she is simply out of work.
The second policy shift is to create a high-quality mainstream vocational route through 16-19 education. We recommend the Government set up a WorkBacc – a certificate, like the Ebacc, that signals a student has followed a balanced curriculum. Too much time in the last three decades has been spent on creating stand-alone qualifications when it is curricula that are important for young people trying to gain a rounded set of skills. The WorkBacc would last two years and contain English and Maths, work experience, a long-duration piece of project work, occupationally specific training and an ‘academic’ subject such as a language or a humanity. It would signal to employers that those young people who fall between an apprenticeship and ‘A’ levels have gained a wide-range of skills.
The third policy shift is to beef up one-to-one job search support. Many economists attribute the rise in the youth unemployment rate in 2004 (well before the recession hit) to the redirection of job-search support from young people to lone parents and disabled workers. Weekly meetings with advisors are proven to raise job-finding rates by about 20 per cent and it is crucial that the Government moves to make such support available earlier to the young unemployed.
The final policy shift is to create better incentives to work. At present, an 18 year-old, just as he or she may be entering the labour market, is disincentivised by a lower minimum wage (£4.98 as opposed to £6.08), so we recommend the same minimum wage for everyone of working age. Since many young people may need to take a low-status occupation as their first job, they need to be motivated to take such a position and use it as a stepping stone to something better. Moreover, many young people simply can’t afford to live on the lower minimum wage rate since they are living independently by the age of 18. For these young people, benefits may seem a safer, albeit ultimately deadening, option.
If these four policy shifts were made we’d be some way towards ending the UK’s long-term problem with youth unemployment.
Matt Grist
Thanks Shona - I should add that in the report we suggest the government gives all the extra income tax and NI from the wage increase back to employers so that the cost of the rise in minimum wage is mitigated by almost half and in a way that is cost--neutral to the state.
David Vinter
Surely there is a growing problem of youth unemployment throughout much of western europe, and I feel the 'old answer' of throwing money at it is not the simple answer it once was.Only recently has the huge and growing competition from the Far East has at last become apparent to our politians, [they are far too inclined to get involved in overseas adventures].
What we face, especially for those of limited education, is a basic
supply/ demand situation, made far worse by customers demanding ever cheaper goods, forcing employers wherever possible to go for the 'automated' solution .
For example, we buy our books from Amazon, a huge warehouse operation, with few employees. The demand for ever cheaper food, leads directly to ever bigger arable farms to get 'economies of scale'. Since 1945, over 950000 workers and small scale farmers have left the land.
The problem is------where are the required jobs to come from? Yes there will be an increasing need for those needed to look after the elderly, but young men won't do it! [ would I at age 18?].
The few retail jobs for girls ask for, and can usually get workers that are 'personable',with confidence and hopfully a clear speaking voice, [talents not taught in school---too politically correct now?].
Again take the any job requiring a driving licence, apart from the very high cost of obtaining a driving licence, the insurance cost to an employer of anyone under 25 is prohibitive!
Furthermore, the cost of just going to work, assuming the ethic is there, seems to take up most of the wages, unlike when I was a boy, when I bought an old second hand cycle for £5, youngsters don't seem to cycle much nowadays. Is it 'uncool'?
I'm sorry but the shovelling and pickaxe jobs have gone forever, as has the requirement for a smart young lad to walk in front of the funeral hearse as Dickens did. No sir a hearse sweeps past at 40 mph on a rush to the crematorium.
So perhaps other correspondents would like to suggest where large numbers of unskilled jobs will come from, there will always be the
'low skilled' no matter how much is spent on education, and no matter how much we wish it were otherwise.
Reality
Don't you just love all this third rate Think Tanking:
Policy 1: Ignore the statistics. Change the method of counting. Best of all "we recommend that the Government stop measuring NEETs altogether". Very convenient. Lets ignore reality and it will go away!
Policy 2: Create yet another useless certificate to inspire employers
to take on young people they do not need. Pie in the sky or what? Patently Matt Grist has never been an employer. Fake pieces of paper Matt that fool no one. You need to get out a bit into the real world of work not your ivory tower 'nonsense' world.
Policy 3: Same minimum wage for everyone. Two moral viewpoints: a) Level everybody down to the lowest common denominator. Great. More profit for the Bill Diamond's of this world. b) put up the
wages to employers across the nation; that should boost employment.
What a load of tosh. What a shallow silly little mind-set. With such
a gob-smacking paucity of intelligence seeking to instruct politicians no wonder we are in the mess we are. Get a real job Matt. Your ideas lackserious intelligence, are totally devoid of originality. They will - were anybody foolish enough to put them into practice - prove a total failure to the real problems of youth unemployment out here.
PS
We see you Ph'd in Kant. Might be a good idea to try and be as original as he was. Though come to think of it look what German Idealism led to; no youth unemployment in Nazi Germany!!!!
Shona McIntosh
I completely agree with all your suggestions! I work for The Access Project, a charity which helps young people get into university, and I know from talking to school-age kids that although they are in general really behind the idea of compulsory education to 18 , the inequality in minimum wage rates REALLY pisses them off. And with good reason! It is completely unfair and exploitative.
Workbacc also a brilliant idea. And while we're at it, can we please stop the obsessive measuring of 5 A*-C GCSEs? It gives schools a massive incentive to get kids to C grade, and no incentive at all to improve those Cs to Bs or even As. It also gives equal weighting to subjects which the jobs/education market does not consider equal in reality.