Is there a long-term solution to tackling youth unemployment?

Having been fortunate never to have had any meaningful period out of work, it can be hard to put oneself in the shoes of one of the 750,000 unemployed 18 to 24 year olds currently in the UK.  That is the most recent figure from the Office for National Statistics (ONS), and it makes grim reading. It is a black mark against the Coalition’s performance, and a personal tragedy for three quarters of a million young people.  It has been said that the current generation has been affected to a greater extent than previous generations, leading to talk of a ‘lost generation’.  Yet the issue is one that has vexed consecutive governments.  Employment opportunities for young people in the early 1990’s were equally hard to come by, and at its peak the number of jobless youth reached 781,000.  Back then a generation was devastated by pockets of large-scale de-industrialisation and the subsequent shift towards financial and service industries as economic drivers.  Many were left behind, not given the skills or knowledge to make a successful transition from education to the new-look economy.  Youth unemployment fell during the dying embers of the Major Government and through the first half of the Blair years, but not even Labour could stem the tide for long.  It bottomed out in 2004 and has been rising steadily ever since.  All this will of course be scant consolation for the current generation, many of whom cannot see a future beyond a life on job seekers allowance punctuated by unpredictable periods of low paid employment.

A Young Fabians Policy Commission, of which I declare an interest as a member, is looking at the issue of youth unemployment, where it occurs, who it affects and how best to tackle the problem.  The first problem is perhaps the most obvious one, that of a lack of demand in the economy. Joe Public is unwilling to spend, and businesses won’t recruit if production falls. Then looking at supply we see that, although numerically there is enough supply to fill the 500,000 unfilled jobs in the economy, it is quality of that supply that is a real concern.  A considerable number of young people have not been schooled in the fundamentals of how to search and apply for jobs let alone succeed in interviews.  These are skills that graduates take for granted but are themselves not immune from.  According to the Confederation of British Industry, over half of businesses are not confident that they will find graduate recruits with sufficient skills, particularly in sectors projected to grow over the next few decades.  The most productive economies are ones where there is a good match between the skills that people have to offer and those that employers demand.  This means the curriculum and related qualifications must be more responsive to the demands of the labour market and to where the next areas of economic growth are.

This also demands a renewed focus on the quality of apprenticeship schemes.  There has been encouraging progress from the Business and Education Departments, but it is still the case that most apprenticeship starts in the last three years have been by those over 24.  Small and medium sized businesses are key to making this policy effective.  There are 4.7 million SMEs in the UK.  If 1 in every 6 or even 12 were given financial incentive and managerial support to take on one new apprentice under 25, a considerable dent could be made in the youth unemployment figures.  Many young people from disadvantaged backgrounds also lack any form of social capital.  A lack of access to social networks and personal relationships that can open up education and work experience opportunities to which more advantaged groups have access to, means that any meaningful opportunity remaining mostly the privilege of children of parents who can afford to support them financially or who have the right contacts.  This is underlined by a recent poll for the Social Mobility and Child Poverty Commission which found that two thirds of people thought that personal connections were more important than what they knew in terms of getting on in life.  One interesting idea might be that companies should find work experience and internship opportunities for employees’ families after they have served a minimum service period.  And entry into the professions has become harder in recent years if you do not follow the graduate route.  When it comes to getting into higher education, young people from the most advantaged areas are still 3 times more likely to enter higher education than those from the most disadvantaged areas.

There is also a massive discrepancy between young people’s job aspirations and the realities of the jobs market.  This can in part be put down to poor careers services provision.  Now with funding for careers services slashed, responsibility has been thrust upon individual schools to provide services, many of which will not have the capacity to adequately deliver this.  Careers services, like the curriculum and qualifications need to be more responsive to employer demands.  Young people need accurate and appropriate information to make informed choices, but accessing and assessing information and advice often relies on an individual’s awareness of their information needs.

The Coalition has made attempts to tackle some of these problems.  But there is incoherence in its policy making.   On the one hand Ministers profess a desire to improve social mobility opportunities for the most disadvantaged groups, and on the other they scrap the Education Maintenance Allowance which was originally devised precisely to help the same groups.   The simplest answer to the problem of youth unemployment would be to get growth and demand back in the economy. But can this be done and if so how sustainable is that as a long term solution?  We must not forget that there are deep structural problems within the UK economy that have built up over the years: the bias towards London and the South East, and pension and welfare provision among them.  Perhaps there is no getting back to what people think of as a normal economic state.  We may be entering a stage where economic growth hovers around the 1% mark.

What has been lost in the debate is an understanding of the different experiences and challenges faced by each age group.  A 16 or 17 year old who cannot yet express their discontent at the ballot box will face different challenges to a 23 or 34 year old that can. Even within these age groups different demographic factors such as gender and ethnicity need to be taken into account.  The Policy Commission will be looking at this and other issues over the coming months.  There is no silver bullet to the problem of youth unemployment, but what are needed are bold and innovative solutions that tackle its root causes.