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Youth unemployment:A million reasons to act?
Tony WilsonCentre for Economic & Social Inclusion
Youth are faring much worse than adultsPercentage point change in unemployment proportions
0
1
2
3
4
5
Recession 16-24 (left axis) 25-64 (left axis)
And this downturn much worse than last
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
May-Jul 2009 to Jun-Aug 2011 Jan-Mar 1993 to Feb-Apr 1995
Percentage change in unemployment in months after peak
Particularly for long-term unemployedPercentage change in 12mth+ unempl in months after peak
This is not all a cyclical problemProportion of young people not full-time education, not employed
In a bit more detail – 16-17 year olds
In a bit more detail – 18-24 year olds
Unemployment highest at 18 and 19
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
16 17 18 19 20 21 22 23 24Age
Unemployed Change in number of unemployed since Apr 2007-Mar 2008
Unemployment by age
The policy response
1. Equip young people for work
2. Increase youth recruitment
3. Tackle long-term unemployment
4. A longer-term vision
The policy response
1. Equip young people for work
2. Increase youth recruitment
3. Tackle long-term unemployment
4. A longer-term vision
Under-achievement at heart of problem
Skills mismatch – quals of new recruits and unemployed
13.9
5.5
26.2
23.7
2.0
13.7
15.0
5.1
5.2
13.8
20.7
2.4
22.1
30.6
0 5 10 15 20 25 30 35
No qualifications
Other qualifications
Below NQF level 2
NQF level 2
Trade Apprenticeships
NQF level 3
NQF level 4 or above
Recruitment of 16-24 year olds not in full-time education
Unemployed 16-24 year olds not in full-time education
A lot of educational reform...
• Drive to localise/ remove prescription• Less ring-fencing• Raise attainment
• Three elements key:• Raising participation age
• Are more places enough?
• Vocational reform• Implement Wolf Review in full
• Careers advice and guidance• Are incentives, accountability right?
Financial support is important
• Education Maintenance Allowance• Always a trade-off deadweight v impact• Clear impact on retention in learning• Biggest impacts on e2e, PLAs
• Bursary scheme• One third the value• Guaranteed support limited to the very few
For the short-term unemployed...
• JCP Offer (flexible adviser support)
• Get Britain Working• Work experience, Work Academies• Work Clubs
• Flexible Support Fund - £150m?• Fee remission for training, Level 2 guarantee
• Early days...
1. Equipping young people for work
Recommendations:• Test outcome incentives in careers advice• Accept CBI proposals on involving employers• Destinations data for former learners at age
24
• Expand coverage of Bursary, encourage bonuses
• Review use of FSF, JCP flex, SFA training...
The policy response
1. Equip young people for work
2. Increase youth recruitment
3. Tackle long-term unemployment
4. A longer-term vision
More apprenticeships are welcome
• High satisfaction, higher wages, more learning
• 440,000 last year• 270,000 under 25• ... But 75% of growth has been in over 25s• And 16-17s basically flat
• Few employers offer them – 6% (NESS 2009)• Not all new recruitment
2. Increasing youth recruitment
Recommendations:
• Stronger incentives to offer to unemployed• May now be happening...
• Simplify – e.g. roll out outcome payment pilots
• Expand Apprenticeship Training Agencies• Risks, but can target u/e and reach SMEs
The policy response
1. Equip young people for work
2. Increase youth recruitment
3. Tackle long-term unemployment
4. A longer-term vision
The issues, and risks, are different
• Interventions need to address three key issues:
• Loss of confidence – despondency – despair
• Loss of skills
• The signal that LTU sends to employers
• As with all labour market interventions, there are risks:
• “Deadweight” – it would have happened anyway
• “Substitution” – stops someone else getting a job
• “Displacement” – job is lost/ not created elsewhere
• “Lock-in” – intervention delays return to work
And responses tend to focus on:
• Support to look for work
• Wage subsidies
• Training and volunteering
• Intermediate Labour Markets/ transitional jobs
Support to look for work
• Not just fortnightly signing...• Coaching, mentoring, travel to interview,
transitional costs, CRB checks/ accreditations etc
• Low cost, effective – good value for money
• But not enough on its own
Wage subsidies
• Low take-up:• “Six Month Offer” subsidy – 8,400 payments for young people
in 15 months of operation (2009-10)• New Deal Employment Option – averaged around 10,000
payments a year (1999-2010)• Employer NICs holiday – 2,300 payments in first year (1996/7)
• May be awareness, level, targeting...
• Deadweight risks – estimated at 35% to 70% in New Deal, higher in some others (up to 85%)
• But long-run benefits for those that get them
Training for the unemployed
• Clear correlation between level of qualifications and likelihood of being in work
• But training for unemployed has disappointing results – “lock-in” risks often outweighing additional benefits• True in UK, US, France, OECD...
• Within that, on-the-job training and work experience is considerably more effective than classroom training
• Volunteering – least effective in New Deal evaluation
Transitional jobs and ILMs
• Major lock-in risks – can more than outweigh benefits – and high unit costs
• So often highly targeted – but can reduce take-up
• Largest returns for low “objective” employability• StepUP led to 23pp increase in employment
probability for low objective/ high subjective group
• Often negative returns for those closer to labour market• And StepUP found much smaller impacts for youth
Did Future Jobs Fund work?
• Inclusion evaluation:• Popular with participants, engaged employers
• Boost to communities and VCS
• But... not always focused on sustainability
• Training often inconsistent
• And support from DWP insufficient
• Value for money:• Net cost to govt £3,946 per participant
• £9,000 per job outcome
• Equates to 70 days fewer on benefits
• Comparable to New Deal for Young People
4. Tackling long-term unemployment
Recommendation:
• Targeted wage subsidy scheme –new jobs lasting six months
• Must go with the grain of Work Programme
• £2,000-3,000 would create a six month job:
• Covers two thirds of total costs
• One third recouped through existing WP funding model
• In-work support and training
• With jobsearch support near the end of the job
• Learn lessons – maximise private sector role, sustainability
The policy response
1. Equip young people for work
2. Increase youth recruitment
3. Tackle long-term unemployment
4. A longer-term vision
The system was broken in 1980s• Now too disjointed, too much responsibility, not enough
accountability
A single Youth Employment and Skills service• JCP support and benefit system for 18-24s• Funding for 16-19 education, adult skills for under-25s, large
majority of Apprentice money, outreach• Underpinned by “Universal Youth Credit”
To maximise attainment, employment and opportunity: • 90% reaching Level 3 and 100% Level 2, by age 24• 5% not in learning or employment at any one time • 80% employment rate for those not in full-time learning
