Without action now, youth unemployment could be the new pandemic for years to come

By Stephen Evans


29 04 2021


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The furlough scheme means employment and unemployment were little affected overall by the latest lockdown. But below the headlines, it’s increasingly clear that young people are bearing the brunt of the economic effects of the crisis.

The latest ONS data released this week shows there are 368,000 fewer 16-24 year olds in work than a year ago. Young people account for 57 per cent of the total fall in employment, around five times higher than you’d expect given the share of total employment they account for. They are also more likely to be furloughed than other age groups.

The main driver is that young people are more likely to work in sectors like retail and hospitality that have been hardest hit by ongoing economic restrictions.

Added to this, many young people have had a disrupted education and those leaving full-time education have found themselves entering a labour market with two-thirds fewer vacancies at the height of the first lockdown in spring 2020.

As a result, the number of young people claiming unemployment-related benefits has more than doubled to over 500,000, despite an extra 80,000 16-17 year olds staying in full-time education, in part to wait out the storm.

It’s clear that young people have had their education and employment opportunities profoundly and disproportionately affected through the pandemic. But with lockdown restrictions now easing, vacancies are back to pre-crisis levels. The success of the vaccine programme gives us hope that we are returning to some form of normality. So will young people’s prospects simply improve in line with the expected economic recovery?

Unfortunately not. The labour market has taken up to seven years to recover after past recessions: economic recovery takes time to translate to increased jobs, so youth unemployment is unlikely to fall back to pre-recession levels for several years. In addition, a period out of work when young can have long-term impacts on pay and job prospects. Our recent report estimated these scarring costs of today’s levels of youth unemployment could exceed £14bn.

We’re storing up trouble if we simply wait for economic growth to help. The latest data show the number of young people out of work for six months or more is already up 50 per cent and likely to rise further in the months ahead. That matters because the longer you’re out of work, the less likely you are to find a job.

The government, fearful of a pandemic generation, has already announced lots of measures for young people, including Kickstart, extra traineeships, support for apprenticeships, and additional education places. Many of these are sensible and laudable, but too disjointed and sometimes slow to get off the ground.

That’s why we’ve argued for a Youth Guarantee, ensuring every 16-24 year olds is offered a job, training place or apprenticeship. With 500,000 young people set to leave full-time education this summer and 830,000 young people on a furlough scheme due to end in September, it’s vital that we proactively engage young people and get them the support they need.

We should also do more to encourage employers to take on young people. That should include extending Kickstart beyond its planned end in December, introducing a £3,000 hiring subsidy for employers who take on a long-term unemployed young person, and building requirements for apprenticeships into public procurement and green investment.

The current labour market prospects of young people should be setting alarm bells ringing. We have some of the right answers, but need a more comprehensive response. The price of inaction would be paid for years to come.

Stephen Evans, Chief Executive of Learning and Work Institute

This article was originally featured in The House.