The Independent View: Government must do more on youth unemployment

More than a year has passed since Nick Clegg launched his flagship £1 billion Youth Contract. The Deputy Prime Minister pinned his hopes on the scheme, hailing it as “a major moment for Britain’s young unemployed people”. Clegg’s scheme, it was promised, would set young people on “the path to work” before the long term damage is done.

Yet one year on and youth unemployment remains one of the biggest challenges we face as a nation. The number of young adults seeking a job continues to cling to one million – and it has done for nearly four years. There is an absence of any official data but all indicators suggest the Youth Contract isn’t working and in order to tackle this most dangerous issue the government must be brave and revaluate employment policy, before it’s too late.

Indeed the scheme, which ties together a raft of training programmes and offers a £2,275 wage subsidy to firms, has already been widely criticised.  The Commons Work and Pensions select committee concluded last year that the Youth Contract was not enough and would likely fail to reach Clegg’s eye-wateringly high targets. This was backed up by a recent Million Jobs/YouGov poll which found 80% thought the government’s youth unemployment policy was ineffective.

A sentiment that is echoed at the grass roots. Speaking at length with youth workers and employers reveals that – if they have heard of the scheme at all – they find it fuzzy, confusing and difficult to grasp. In other words the Youth Contract has failed to win the support of the very people it needs to be successful.

However we must give credit where it is due and there can be no doubt that the underpinning principles of the Youth Contract are good ones. It rightly works on the presumption that the only way we will crack down on devastatingly high levels of youth unemployment is to incentivise taking on a 16-24 year old. Yet businesses don’t have the time and resources to jump through hoops – and the vast majority cannot be doing with the Youth Contract.

After all any successful youth unemployment policy must appeal to businesses and support enterprise. A survey by the Recruitment and Employment Confederation found one third of employers were unaware of the scheme and 36% had no plans to use it. Clear cut tax and NI breaks would be a much simpler alternative and would garner support amongst firms – the very people we need on side.

Nor does the Youth Contract get to the root of the issue but instead papers over the cracks. Even when the economy is booming 7-9% of young people are out of work and today’s figures revealed 1.09 million young adults are not in any form of education, employment or training. This is unacceptable and hints at a fundamental flaw in governmental infrastructure. To overcome our structural NEET problem we need a redesign of training policies and an overhaul of the benefits system for young adults. Our school leavers should not be allowed to fall off a cliff but encouraged to take the opportunities open.

The government should look to countries where young people move smoothly into jobs. They should look to Germany, the Netherlands and Switzerland where, at under 10%, the youth unemployment rate stays at around half that of the UK. These countries offer a first class vocational education and apprenticeships hold real clout. The Germans famously use a “Minijobs” system where the under 25s are encouraged to take on one or more flexible, part-time job. They can earn under 400 Euros a month without paying any tax or NI and employers pay a flat rate of 30% to a single body. The scheme is easy to understand, supports employers and meets current labour market demands. The Germans and the Swiss are leading the way in terms of youth employment and we cannot afford to get left behind.

Looking at these successful schemes in Northern Europe further highlights the flaws in the Youth Contract. This flagship scheme is like fighting a forest fire with a water pistol. The government must do much more, much faster.

The Independent View‘ is a slot on Lib Dem Voice which allows those from beyond the party to contribute to debates we believe are of interest to LDV’s readers. Please email [email protected] if you are interested in contributing.

* Lottie Dexter is the director of the youth employment campaign Million Jobs

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9 Comments

  • I personally think we need to look again at the “youth unemployment” statistics.

    Yes, around 15% of young people are NEET but only 55% of them are seeking work. This sets the unemployment rate at 8.0%, compared to 7.8% for the rest of the population.

    That’s not to say we shouldn’t do anything about it, but the youth unemployment crisis seems to be largely an invented disaster.

  • Grammar Police 28th May '13 - 10:09am

    “80% thought the government’s youth unemployment policy was ineffective.” 80% of what? The general population, young people, business owners? Obviously this makes a pretty big difference.

    Also, on these two quotes:

    “Even when the economy is booming 7-9% of young people are out of work …. This is unacceptable and hints at a fundamental flaw in governmental infrastructure. ”

    “They should look to Germany, the Netherlands and Switzerland where, at under 10%, the youth unemployment rate stays at around half that of the UK.”

    Are you saying that when the economy is “booming” our youth unemployment figures are about as good as Germany, the Netherlands and Switzerland? If so, it’s not really suggesting to me that their youth unemployment strategies are vastly better.

    On the Million Jobs website, every press release is basically the same – there’s been a fall in youth unemployment but it’s not good enough. You highlight the issue, which seems to be lack of knowledge (young people, youth workers and employers), and an unwillingness of employers to ‘jump through hoops’, and the solution (tax breaks). But what isn’t clear is how this is any less of jumping through hoops . . .

  • When we have the EU planning to offer unemployed youngsters from other countries language courses (guess which language will be the most popular) and free flights to look for work in jobs markets where unemployment is lower, how are we going to solve our own home grown youth unemployment problem? With traditional starter jobs like hospitality, retail etc increasingly taken by overseas workers, we have made it much, much harder for young people from the UK to find work. Sorry to have to say this, but it is a fact. The number of new jobs in the UK is not unlimited and our young people are being elbowed out of the way in the fight for them.

    We clearly have much to do in improving basic qualifications, investing in training (quality, not just quantity) and this will take a change of attitude on behalf of employers, but a whole generation has been let down by collapsing educational standards under Labour.

    According to the Institution of Mechanical Engineers, 53% of manufacturers said young people had poor skills and 38% said they lacked a good work ethic. http://www.ibtimes.co.uk/articles/470946/20130524/uk-youth-lazy-unskilled-manufacturers.htm

    We do have a serious problem of employability and it is this that needs to be solved. Even then, it is going to be an massively uphill struggle to sort out decades of underinvestment both from government and from business.

  • The government should information on what jobs are needed and the skills required for each town/district. There is too large a mismatch between what employers want and what schools produce and what young people want to do and think what is required.

    RC it is not just employers it is parents, schools and young people having the wrong ideas to the academic qualifications, technical skills and attitude to work.

    Where there was un/semiskilled employment , school leavers expected to leave on a Friday and walk into a job on Monday: academic qualification were irrelevant. One take a horse to water but one cannot make them drink. For the tree of knowledge to bear fruit it must be pruned and water.

    Too many small employers will not take on school leavers because they are worried about sacking them if they are no good- we need 3 month, 6 month, 1 year and 2 contracts which enable an employer to ,look at someone and assess them before being employed full time. This approach was used in Germany in the 1990s under Schroeder..

  • This is a huge crisis. The difficulty is that I don’t think that UK politicians of any party have a clue about how to run the economy or how do tackle youth unemployment. In his autobiography Alan Clark, who was a junior minister under Thatcher, describes how his department (responsible for youth training) was a make-work scheme for civil servants (or words to that effect) and it’s not changed much since.

    For my money the biggest single change one could make would be to dump the crazy notion that university is the one-size-fits-all solution for what young people do on leaving school. There needs to be a wholly different pathway of high quality training (i.e. easy to fail for those not motivated enough per RC’s comment above) that is not primarily academic and which is also simple enough that even the smallest employer understands exactly how it works. Also, crucially, it would give schools something tangible to offer their students of a practical disposition. At the moment schools have to resort to a producer-push model because there is no tasty carrot to dangle before students for whom university is not a sensible option. Producer-push models ALWAYS fail.

  • Bizarre to see Lottie say we should learn from the Germans, on the grounds that:

    “The Germans famously use a “Minijobs” system where the under 25s are encouraged to take on one or more flexible, part-time job. They can earn under 400 Euros a month without paying any tax or NI and employers pay a flat rate of 30% to a single body.”

    In the UK anyone of any age can earn c. 1000 Euros a month without paying any tax (and 800 Euros without paying any NI) and their employers pay a flat rate of 0% in employers NI.

    So whatever is causing the difference in youth employment/unemployment it certainly isn’t lower taxes on employing young people in Germany.

    Facts – always a useful thing for policy making!

  • Agree strongly with Tim’s view here. There isn’t a need for a minijobs system. For those looking to work, there is a skills mismatch going on. Fór those not looking to work, but not anything else, there is a worrying traipse into long term disengagement from the economy.

    I think for those looking to work, its right to give people access to training but wrong to think it just stops there. They need to build this into supporting their own career and inevitably those of others.

    I need to flesh this out but i should emphasise that young people are a great and vital economic resource if we can channel that energy rather than lose it to our economic competitors or in some cases to idleness.

  • Agree with the conclusion to this article – that much more needs to be done, much faster. Reportedly, more than half of young black men available for work in Britain are unemployed, Ireland is seeing mass youth emigration, as the best and brightest get on their bike for better prospects in Canada and Australia , exacerbating the problems associated with a stalled economy and ageing population.

    I think we need to bite the bullet and introduce Guranteed employment for young people within a structured training program,

    Offering publically funded minimum wage jobs in the charirty/social enterprise sector or within local authorities can match idle labour with much needed socially usefully activities, while providing a platform for youth to acquire the necessary skills for entry into the mainstream workforce.

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