There are many ways to describe the current state of youth unemployment, and none of them is good. It now stands at 15.9%, up 1.5 percentage points in a year, a rise of more than 10%, and now at its highest level in a decade, higher even than during Covid.
In practical terms, that means over 100,000 more young people than last year are actively looking for work and unable to find it.
Yes, the economy is sluggish. But there’s also a more direct reason: it has become more costly to employ people.
In such circumstances, often the first thing employers will do is freeze recruitment. It is young people that that affects most.
If firms do need to make redundancies they may follow a ‘LIFO’ principle - last in, first out. Making newer employees redundant is less costly.
Then there is the secondary effect, that when there are vacancies, there is also a bigger pool of willing experienced candidates to fill them.
This is all now made worse by the fact that the sectors that disproportionately employ young people (including shops, cafés and hotels) have been particularly hard hit by higher employer national insurance contributions and increased business rates.
The result is a vicious cycle. Employers are not hiring, and young people who want to work are trapped in what can seem an endless job search.
Confidence may erode, and work becomes harder to secure the longer someone is unemployed.
We also know from extensive evidence that this has long-term “scarring” effects: if you’re out of work in your twenties you can still feel the effects on your career decades later.
At the end of last year, the government announced two programmes aimed at helping young people on Universal Credit find employment. This included “work support sessions”, “work pathways” and “youth hubs”. Indeed, during the recent parliamentary debate on youth unemployment, programmes, pathways and schemes appeared to be the government’s primary answer to the problem.
But there are two major issues with this approach.
First, some initiatives apply only after 18 months of job searching – which is already a long gap.
Second, helping young people become “work-ready” is valuable, but if employers are not creating entry-level jobs in the first place, it risks being a wasted effort. Rather like training people to swim when there is no water in the pool.
What we are seeing across the country now are firms reeling from the combined effects of increases to their direct employment costs and additional regulation through the Employment Rights Act. As one local business recently told me, “I’ve never known the market to be so depressed, for so long, in over 30 years of doing this.”
In the recent parliamentary debate on youth unemployment (clip above), I urged the government to re-think its approach. Putting out-of-work youngsters through “a programme” does serve a purpose. But more important is for there to be sustainable real jobs for them. And that calls for a re-think in the government’s approach towards business tax and regulation.
