A Price worth Paying? Short Term Economic Recovery and the Loss of a Generation

Melanie Simms, Professor of Work and Employment at the School, highlights the under-reported blind-spot in the over-reported fact of an emergent economic recovery: today’s youth are unlikely to be experiencing it.    

It is roughly a decade since researchers and policy makers began raising serious concerns about the approximately one million young people who are Not in Employment, Education or Training (NEETs). According to the Labour Force Survey, around half of these young people have been NEET for longer than 12 months. Such a volume of young people who are finding access to the labour market difficult causes serious concern because sustained periods outside work, education or training are known to have debilitating, long-term effects upon those who experience them.

Internationally established research has shown us that people unemployed for any extended period at the start of their working lives are more likely to be unemployed in the future, less likely to be offered as much training as other workers and far more likely than the general population to find themselves living in poverty. Since the financial crisis the situation for young workers has deteriorated rapidly. From 2004, the number of NEETs grew slowly but steadily. After the financial crisis of 2008, the numbers of young people struggling to access work and training jumped significantly and there has been relatively little improvement in recent quarters. Sustained youth unemployment, not to put too fine a point on it, is anything but neat.

As part of my research, and in an effort to understand the problems young people face, I am talking to employers about their attitudes and practices with regard to the recruitment and managing of young workers. This project is a development of previous work where I have looked at youth unemployment in the UK and around the European Union. It hasn’t taken long to uncover some of the reasons why young people are losing out in the current labour market.

Often, young people simply don’t know where the jobs are. Careers guidance has been devolved to individual schools with the effect that in some cases the provision is excellent. In other schools, however, career guidance is anything but satisfactory. This inevitably leads to a situation where, in many cases, young people are left to fend for themselves, that is, to rely on information from websites and, if they are lucky, the guidance of well-informed parents and friends. When these students approach employers directly they are often poorly briefed about the skills and competences they need to succeed in a tough labour market and, what is more, they are often competing against more skilled and experienced – older – workers.

The government has addressed the problem by encouraging young people into work, training and employment through a system of incentives and punishments, often with a focus on improving their ‘employability’. In the recent Autumn Statement, a policy to reduce the National Insurance Contributions (NICs) that employers pay if they choose to hire a young worker was announced. This is definitely a step in the right direction but it is far from enough.

Consider an example that was given during some of my previous research. Imagine a pub manager trying to juggle multiple objectives and tight budgets. She is very unlikely to see the reduction in NICs in her weekly staffing budget. The decision about who to hire will remain hers and so, with all the other things she has to worry about, there will be little incentive for her to take on the responsibility for training and mentoring a young worker. Another example I have encountered is that many employers are genuinely committed to improving routes for young people to gain skills and apprenticeships. The problem is that they have to jump through a lot of bureaucratic hoops in order to get the support and funding which, unsurprisingly, many companies, especially smaller ones, simply don’t bother doing. The government has also tried making JobSeeker’s Allowance claimants take unpaid placements as a means of providing work experience. Undoubtedly there are some cases where this has been useful but too often these placements are in the performance of menial tasks which, moreover, used to be paid for.

Employers are far from blameless in all of this. Unsurprisingly, more and more employers have taken advantage of the fact that some people are prepared (or forced) to work for free. At the same time, in order to increase their own flexibility they have often reduced the hours available to workers at the lower end of the labour market so that, instead of one worker doing a 35 hour week, for example, two or three workers will make themselves available for 10-15 hours per week, sometimes on a “zero-hours contract” meaning that young workers find it harder and harder to access the jobs that will offer opportunities for progress onwards and upwards.

It is hard not to see some of these initiatives as just so much blaming of the victims. The overall effect has been that many young people are continuing to struggle to find work. My wish for 2014 is that we stop blaming them for what is very obviously a structural problem. The real problem is not with a idle, lazy or feral generation of “NEETs” but with how current government policy creates disincentives for employers to offer stable routes into good jobs and with how it demonstrably fails to give young people access to useful guidance in negotiating an unforgiving labour market.

These are things that could change with sufficient political will. As with the crisis, so too with the recovery: we seem to be anything but “all in this together”.