Youth unemployment: Cyclical or Structural


It is easy to assume that Youth Unemployment is merely another sign of recession Britain, yet our recent research project in partnership with The Work Foundation suggests otherwise.  Youth Unemployment was on the rise long before the recession hit and although our post 2007 world has done nothing to alleviate the issue it is not the only factor.  In some parts of the UK 1 in 3 young people are not in employment yet are we worried?  Youth Unemployment is cyclical and although the recession has had a detrimental effect it is not the only cause.  To ensure young people land safely in the labour market, we need to fix both the cyclical and the structural and if we don’t, economic recovery will not be enough to get our young people into work.

The costs are too high to ignore.  The current cohort of young people not in education training or employment will cost the UK economy £35 billion in lost economic opportunities and cost the taxpayer £13 billion over their lifetimes. (Audit commission 2010)  Wage scarring is also likely; Young people who are unemployed for a long time will earn less throughout their whole lives. They will be less employable. They won’t have the skills that business needs and they are more likely to have long-term health problems. The costs are economic, societal and individual – what a waste.

Last year the Private Equity Foundation developed a “Manifesto for action”, a ten point plan for improving the way we as a nation tackle the NEET issue.  It looks at strategic enablers and more pragmatic approaches for getting young people into work.  It highlighted that some of the barriers to work can be as straightforward and solvable as transport being too expensive for some to seek or start work or as culturally significant as a lack of motivation. We heard some stark statements from young people on what they believe the problems to be: services are often termed “irrelevant”, or “confusing and difficult to navigate”, formal, classroom training “lacks relevance” for some in this group and depressingly others commented that there are no second chances. “If at first you don’t succeed, you don’t succeed”.

We are keen to hear more from employers.  Why do they struggle to recruit young people, what are the barriers?  We often ask whether our young people are ready for work, but how ready is the world of work for our young people?

Another crucial element in understanding the barriers our young people are facing is that of local labour market supply and demand.  The UK is not one labour market, but rather is many localised labour markets, each with differing needs and requiring different skills.  Are we giving the local labour market an adequate voice in the preparation and skilling of our young people?  Are we training young people for jobs that simply do not exist or not training them for opportunities which are in demand?  Do young people having realistic expectations of the labour market; I’d ask is there also a need for employers to be realistic about their role in training and skilling young people?

We are working in in partnership with The Work Foundation on a two year research programme which will take a deeper look at some of these issues. Throughout the programme we will be looking at both short and long term ways to help young people become productive members of the labour market and putting forward policy recommendations for fixing both the cyclical and structural relationship our young people have with it – you can view the research papers here  and would love to hear your comments.

Rhian Johns

Private Equity Foundation