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Youth unemployment: A million reasons to act?

Youth unemployment: A million reasons to act?. Tony Wilson Centre for Economic & Social Inclusion. Youth are faring much worse than adults. Percentage point change in unemployment proportions. And this downturn much worse than last. Percentage change in unemployment in months after peak.

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Youth unemployment: A million reasons to act?

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  1. Youth unemployment:A million reasons to act? Tony Wilson Centre for Economic & Social Inclusion

  2. Youth are faring much worse than adults • Percentage point change in unemployment proportions

  3. And this downturn much worse than last • Percentage change in unemployment in months after peak

  4. Particularly for long-term unemployed Percentage change in 12mth+ unempl in months after peak

  5. This is not all a cyclical problem Proportion of young people not full-time education, not employed

  6. In a bit more detail – 16-17 year olds

  7. In a bit more detail – 18-24 year olds

  8. Unemployment highest at 18 and 19 Unemployment by age

  9. The policy response • 1. Equip young people for work • 2. Increase youth recruitment • 3. Tackle long-term unemployment • 4. A longer-term vision

  10. The policy response • 1. Equip young people for work • 2. Increase youth recruitment • 3. Tackle long-term unemployment • 4. A longer-term vision

  11. Under-achievement at heart of problem • Skills mismatch – quals of new recruits and unemployed

  12. 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?

  13. 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

  14. 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...

  15. 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...

  16. The policy response • 1. Equip young people for work • 2. Increase youth recruitment • 3. Tackle long-term unemployment • 4. A longer-term vision

  17. 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

  18. 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

  19. The policy response • 1. Equip young people for work • 2. Increase youth recruitment • 3. Tackle long-term unemployment • 4. A longer-term vision

  20. 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

  21. And responses tend to focus on: • Support to look for work • Wage subsidies • Training and volunteering • Intermediate Labour Markets/ transitional jobs

  22. 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

  23. 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

  24. 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

  25. 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

  26. 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

  27. 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

  28. The policy response • 1. Equip young people for work • 2. Increase youth recruitment • 3. Tackle long-term unemployment • 4. A longer-term vision

  29. 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

  30. Centre for Economic & Social Inclusion • tony.wilson@cesi.org.uk • @tonywilsonCESI

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