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Youth Unemployment Committee

8.Lord Baker of Dorking proposed a special inquiry committee to consider ‘youth unemployment.’

9.Youth unemployment is a long-standing issue in the UK and rates of unemployment tend to be higher in this group than amongst older adults. Whilst rates of unemployment amongst 16 to 24 year olds have been decreasing in recent years, COVID-19 has profoundly affected the labour market and economy, and youth unemployment is rising sharply as a result. Research shows that those in this age group are being disproportionately affected by the pandemic and are likely to bear the brunt of economic scarring for years to come. Furthermore, the Brexit transition period has added additional pressures to the economy.

10.Recent announcements from the Chancellor of the Exchequer and the Office for Budget Responsibility show that the UK economy is set to shrink by 11.3% in 2020, the sharpest decline in 300 years and is unlikely to return to pre-crisis levels until Q4 of 2022. Historical analysis has shown that the detrimental effects of economic crises are likely to be most acutely felt by young people in the short and long-term.

11.The UK labour market is effected by ‘skills gaps’ and some experts argue that this is due to the focus placed on academia within the education sector. The changes in migration due to Brexit and the challenges posed by COVID-19 may compound these skill gaps.

12.Unemployment in the UK has risen this year. Current figures show that 602,000 young people aged 16 to 24 are unemployed, an increase of 101,000 from the year before. The current unemployment rate for 16 to 24 year olds stands at 14.6%, almost 3% higher than the same period in 2019.6 The overall unemployment rate amongst 16 to 64 year olds in the UK is currently 4.8%.7 Forecasts released by the Office for Budget Responsibility on the 25 November 2020 predict that the overall unemployment rate amongst 16 to 64 year olds may rise to 7.5% by Q2 of 2021, which means that youth unemployment is likely to rise too.8

13.COVID-19 has had a profound effect on the labour market and economy.9 Whilst the economy is expected to avoid another recession, the Bank of England has predicted that unemployment will rise again in 202010 and the Institute for Fiscal Studies echoes this forecast.11 After the last recession in 2008–2009, it took seven years for the unemployment rate to return to pre-recession levels.12 The economic shock caused by COVID-19 is different, however and in this economic crisis, unemployment figures are closely linked to Government support schemes, such as Coronavirus Job Retention Scheme13 and containment measures14 and vaccine developments.

14.In line with past recessions, some experts predict that COVID-19 will have a disproportionate effect on employment and career prospects for young people. The Resolution Foundation predicts that the employment rate of today’s graduates is projected to be 13 per cent lower, within three years of their graduations, due to the pandemic.15 Research undertaken by the Centre for Economic performance has shown that those aged 16-25 are over twice as likely as older employees to have suffered job loss, with over one in ten losing their job, and just under six in ten seeing their earnings fall.16

15.Risks associated with young people facing prolonged periods of unemployment can include negative impacts on their potential earnings and general health, and an increased risk of entering a life of crime.17

16.Lord Baker’s proposal cites the focus on academia that has shaped the state schooling system since the Educational Reform Act of 1998 which introduced the national curriculum.18 The proposal cites widely held concerns over the skills gap that this may have created.

17.Over the past 50 years the number of individuals pursuing higher education has rapidly increased. In 1980, around 15% of the population stayed in higher education after the age of 18. By 2017, over 50% of young people were going to University. In 2020, the Secretary of State for Education, Gavin Williamson expressed support for achieving a parity of esteem between academic and technical education, announcing intentions to reform higher education and move towards “a wholesale rebalancing towards further and technical education.”

18.A report undertaken by the Government Office for Science in 2017 found a range of long-standing weaknesses in the UK economy and skills system. One reason identified for this was technological change, with the OECD estimating that by 2036 10% of occupations in the UK will be fully automatable and McKinsey and co. estimating that around 50% of activities carried out by workers today could be partially automated.19 The report identified a mismatch between the skills of labour market entrants and the requirements of employers, citing greater collaboration between employers and education as a potential way forward.

19.The Government have made a number of announcements and commissioned independent reports related to education and skills gaps in the UK. In 2019, the post-18 review of education and funding, an independent panel report led by Philip Augar was published.20 The report found that “both higher technical and craft skills are in short supply with long-standing skills gaps in strategic sectors such as engineering, IT and digital”. It also concluded that “migrant labour is required in many sectors and at different levels.” The Government’s detailed plans in response to this report are not yet known. Further reviews of post-16 qualifications have since been announced this year 21 alongside a review of the University admissions system in England.22

20.A Government initiative to tackle youth unemployment has been implemented in 2020. The Kickstart Scheme provides funding to employers to create job placements for 16 to 24 year olds on Universal Credit with the Government funding the minimum or national living wage for 25 hours a week for up to 6 months.23

21.A cross-cutting inquiry could focus on the genesis of youth unemployment and associated medium to long-term outcomes. A special inquiry of this nature could examine the following:

• The causes and risks associated with high levels of youth unemployment and how these might be addressed.
• Under-employment and insecure employment amongst young people and the associated challenges and risks (financial insecurity, exploitation, limited career progression).
• Whether the national curriculum effectively meets the current and anticipated future needs of the labour market and society and if not, how this might be addressed.
• The societal trend of prioritising the A-level/University route, the consequences for the labour market and society and what steps may be taken to address this.
• The funding and support provided for technical education, including apprenticeships, sector-based skills programmes and the national skills fund.
• The challenges posed by COVID-19 and Brexit to the employment prospects for young people and how these might be addressed.
• The challenges posed by COVID-19 and Brexit to the labour market and the role of education and training for young people in meeting this challenge.

22.The Committee recommends that a special inquiry committee be appointed in late January 2021 “to consider youth unemployment, education and skills”, to report by 30 November 2021.

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