By Joe Dromey
30 06 2020
The coronavirus crisis is both a public health emergency, and a developing economic crisis. While young people are less vulnerable to the pandemic, they are likely to be hit hard by the recession it has triggered.
Preventing a rise in youth unemployment should be a priority for government. Young people tend to suffer most during downturns. During the last recession, youth unemployment reached 21%, four times higher than unemployment for those aged 25 and over. The impact on young people is likely to be particularly significant during this crisis due to the distinct sectoral impact. Our research has shown that ahead of the crisis, young people were twice as likely to work in the ‘shutdown sectors’ that were hit hardest by the lockdown. The lasting impact of social distancing is likely to be larger on sectors like retail and hospitality which have traditionally provided a large number of jobs for young people. We also know that youth unemployment can have a significant and lasting ‘scarring’ impact on young people, boosting apprenticeships alone will be insufficient.
The Prime Minister’s initial response was to back calls for an ‘apprenticeship guarantee’. While this is a great slogan, it is not really deliverable, and apprenticeships alone will not be a solution to this crisis. That’s partly because apprenticeship starts for young people were declining before the pandemic, and they have nose-dived since. The apprenticeship levy has led to many large employers shifting investment towards existing employees and older workers, whilst apprenticeship starts for 16-18 year olds have declined. The crisis has accelerated this trend; apprenticeship starts for those aged 16-18 were down a staggering 74% in April, far higher than the decline for those aged 19 and over. Apprenticeships are not just a course that can be expanded at the whim of Government – they are a job with training. So if employers are unsure about future demand, they will be wary of taking on young people. Finally, even if we could drive a heroic increase in apprenticeship starts for young people, this path is not right for everyone.
The change of focus to an ‘opportunity guarantee’ is therefore to be welcomed. Learning and Work Institute has been working with a coalition of think tanks and researchers to call for such a guarantee.
So, what should an opportunity guarantee look like, and what should government bear in mind when designing this?
First, we need to see action at scale and at pace. We are at risk of unemployment rising to levels not seen since the wake of the Great Depression. Hundreds of thousands of young people are due to finish full time education this summer, so we need to ensure the opportunity guarantee is in place in months, not years. While the Prime Minister announced a ‘New Deal for Britain’ today, the promised £5 billion of investment in infrastructure is certainly not Rooseveltian in scale. The Government has proven itself ready to take rapid and unprecedented actions in response to the crisis, from setting up Nightingale Hospitals from scratch in a matter of weeks, to developing the furlough scheme which has helped protect millions of jobs. We need to see similar urgency, and similar scale in responding to the youth jobs crisis, with a bold offer in place by September. Given the risk of long-term scarring, it is better to over-react here than to under-react.
Second, we need to learn from history about what works in supporting young people during a crisis. During the last crisis, the Future Jobs Fund created ring-fenced job opportunities for young people who had been out of work for 6 months or more. Evaluations of this programme showed it had a positive impact, with participants being more likely to be in non-subsidised employment and less likely to be on benefits several months down the line. Building on this example, Learning and Work Institute have called for an Opportunity Fund to create ring-fenced temporary jobs for young people.
Third, rather than focusing on just one measure, we need to ensure a range of pathways and opportunities for young people. In addition to the Opportunity Fund, and boosting apprenticeship starts, we need to support more young people to stay in education for an additional year. Even with a rapid expansion of support to help young people find an apprenticeship or a job, young people entering the labour market during such a significant crisis are likely to struggle. We should try and reduce the number of young people entering the labour market. This could be done through a simple maintenance grant – paid at the level of Universal Credit – which would incentivise and support young people to build their skills, rather than get stuck on benefits.
Finally, we should ensure that a focus on preventing youth unemployment does not come at the cost of other at-risk groups. While young people overall are more likely to face unemployment as a result of this crisis, there are some significant differences within age cohorts too. Young people with degree level qualifications are less likely to face unemployment and long term negative consequences. Conversely, some groups of older workers – particularly those with lower levels of qualifications and with disabilities – will face a higher risk of unemployment. So while preventing youth unemployment is an important policy priority, we also need to think about what we can do to prevent older workers losing their jobs, and help those that do to return to the labour market (more from Learning and Work Institute on this soon).
Joe Dromey, deputy director for research and development, Learning and Work Institute