The youth unemployment time bomb: still ticking?

Author: Hannah Brown
Date: 30/11/2009

Unemployment has risen sharply during the recession, especially among young people. Although increases in youth unemployment have levelled off recently, the percentage of NEETS (17-18 year olds not in employment, education or training) now stands at over 1 million.  

Long spells out of work leave young people particularly vulnerable to long-term scarring, which affects their future careers and damages cities' future economic potential. 

The UK is the last major economy still to be in recession. But even once the recovery is underway, unemployment will continue to rise through 2010. 

The Government has taken steps to mitigate the worst effects. The Future Jobs Fund has so far provided funding for 95,000 jobs to be created for young people. Only a few hundred of these jobs have actually been filled. JobCentre Plus offices are now working hard to find and match ‘job-ready' young people to take these jobs.

Youth unemployment is a structural problem, not just a short-term recession problem. 193,000 young people have now been out of work for a year or more. But high levels of youth unemployment have been holding back our cities for a long time. In December 2007, 116,000 young people had been out of work for a year or more.  

In June we welcomed the Future Jobs Fund as a short-term response, appropriate to help some places through the worst of the recession.  But it's not enough - it is only a short-term measure, and can't be expected to solve the entrenched problems that prevent many young people from getting into the world of work.  Too often they just don't have the skills that local business need. 

The Government is about to lay out its plans for recovery in the Pre Budget Report on 9 December. All three main parties will soon be setting out their vision for 2010 onwards, in their election manifestos. Labour, Conservatives and Lib Dems should all focus investment on giving young people the employability skills they need.

This Government has invested billions in skills. Since 2002, the Learning & Skills Council budget has increased from £7.4 billion pa to £12.2 billion pa - an increase of 65%.  But the UK still performs just as poorly in international skills comparisons, and is projected to drop even further behind international competitors over the next ten years, from 17th out of 30 OECD countries to 27th by 2020.   In cities like Birmingham and Liverpool the percentage of young people with no qualifications has fallen, but was still stuck at 17% and 14% respectively in 2008.

That is why in our Cities Manifesto we are calling for a refocusing of skills spending.  This was recently echoed in Lord Mandelson's Skills Strategy - and by Shadow Skills Secretary David Willetts, who called for skills quangos to be cut back to just three.  Alongside the need to make savings is an imperative to spend more effectively. Cutting back many of the quangos and programmes which just haven't worked is an essential first step.

The Conservatives are consulting on reforms to Further Education funding to give more freedom to colleges, and expose them to more commercial pressures.  But this should take account of the needs of the real economy of an area - cities should be given more responsibility for increasing the employability of the local workforce.  We believe that skills budgets should be devolved to City Regions or to Local Authorities, and they should be responsible for financially rewarding Further Education colleges for giving young people the skills that will get them into work. 

The UK's low skills profile compared to international competitors

*In the UK 'upper secondary attainment' is measured as a minimum of five GCSEs at grades A*-C, or an equivalent vocational qualification.

Source: UK Commission for Employment and Skills Ambition 2020: World Class Skills and Jobs for the UK London: UKCES