Youth Unemployment and the Youth Contract - Work and Pensions Committee Contents

9  Conclusions: the Youth Contract approach

219. The Youth Contract is necessary as a broad range of initiatives to address the current youth unemployment problem. It builds on existing measures which have been shown to aid young people's long-term employment prospects: JCP support; work experience; and apprenticeships. Extra resources for these measures, along with two new programmes, are a good start to the Government's response to levels of youth unemployment which are detrimental to both the individuals concerned and the future prosperity of the country.

220. However, the Youth Contract will not on its own be sufficient to create a significant number of jobs for young people. A strong recovery in youth employment rates will only be achieved with a return to economic growth and a substantial increase in the number of job vacancies.

221. Wage incentives, the key element of the Youth Contract, are likely to ease the labour market disadvantage of 16-24 year-old JSA claimants by helping to "level the playing field" in the mainstream jobs market. However, without changes to its design, the scheme is likely to be less effective than some previous programmes in helping those with the greatest barriers to employment. There are also valid value-for-money concerns about delivering wage incentives via the Work Programme; the current pilots, in which Jobcentre Plus is working directly with employers to deliver the scheme, may demonstrate that this is the more efficient and cost-effective route.

222. If the Youth Contract meets its targets it will create around 430,000 additional opportunities for young unemployed people. This is welcome but, given the large numbers who require support, it will only make a significant impact if all the targets are met. We are concerned that the more eye-catching targets—160,000 wage-incentivised jobs and 250,000 extra work experience and Sector-based Work Academy placements—are too ambitious. The new NEETs initiative may also struggle to reach the intended number of disadvantaged young people.

223. A long-term solution to youth unemployment will need to go far beyond the Youth Contract. The support provided to make the transition from education to work is crucial for young people's long-term prospects. Schools need support in deciding how best to prepare young people for the world of work; it remains to be seen whether the Government's reforms to the way in which careers advice and work-related learning are delivered will contribute to this.

224. Raising the participation age in England presents an opportunity to improve provision for the majority of young people who do not go on to university. Reform of post-16 vocational educational and training is much needed but changes will only be effective if they ensure provision is of high quality and properly prepare young people to compete in the labour market.

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Prepared 19 September 2012