Monday, 13 February 2012

Youth Unemployment: beyond the Youth Contract

by Mark Corney

Wednesday's jobless figures will confirm that the Coalition Government must go well beyond the Youth Contract to prevent another lost generation of young people. The new, three year Youth Contract mainly for 18-24 year olds can only be a starter for ten.

To be fair, the Coalition is at least concentrating on the correct group of 18-24 year olds.* Young people can be divided between the employed, unemployed and the inactive. For each category, however, young people can be in full-time education or not. 

So in terms of unemployed 18-24 year olds, the government is spot on to focus on the 525,000 in England who are out of work and not in full-time education, and the 490,000 who are inactive and not in full-time education.

On entering office, the Coalition pinned its hopes on two measures to keep a lid on youth unemployment. For those on the higher education track the number of full-time places would be broadly maintained so that over 840,000 young people aged 18-24 could be in full-time HE at any one time. For those on the jobs track who were not in full-time education but claiming Jobseekers Allowance, the answer was the much heralded all-age Work Programme.

As the jobs picture worsened through 2010 and 2011, the Coalition increasingly turned its attention to expanding apprenticeships. The HE lobby thought this to be terribly unfair. Expansion of apprenticeships should go hand in hand with an expansion of full-time HE places.

Yet, this completely misunderstands the policy decision the Coalition made because of the fiscal crisis. Apprenticeships trumped full-time HE because they were cheaper not in terms of tuition and training but in terms of financial support.

For full-time HE, the taxpayer funds living costs in the form of maintenance loans and grants. For apprenticeships employers pay living costs in the form of wages.

In the run up to the autumn statement last year, the obvious point dawned on the Treasury and DWP that despite more apprenticeships youth unemployment kept rising.

The explanation is that apprenticeship funding is allocated to 18-24 year olds already in work rather than those on the dole.

And so the Coalition announced the Youth Contract containing a battery of measures such as work placements for 18-24 year olds on JSA for three months, weekly signing on from five months, wage subsidies and apprenticeships for JSA claimants after nine months and mandatory participation on the Work Programme thereafter.

Unfortunately, the number of unemployed and inactive 18-24 year olds not in full-time education is over a million and is set to climb throughout 2012.

The weak economy is forcing employers to cut the jobs for 18-24 year olds not in full-time education. Traditional sectors who recruit young people such as construction, retail and the armed forces are still cutting back.

And while employment levels for the over 25s are being protected by growth in self-employment - currently above 14% and more than 4m – fewer than 5% are aged 18-24, some 133,000, and growth has been limited.

Something beyond the Youth Contract is needed.

The debate over whether apprenticeships should be for employed or unemployed 18-24 year olds will undoubtedly intensify.*

Developing a three month offer for unemployed 18-24 year olds through doubling the number of wage subsidies under the Youth Contract, and creating a Part-Time First Step guarantee allowing JSA claimants to take part-time jobs for up to a year as proposed by David Miliband and the Commission on Youth Unemployment,*** each deserve detailed consideration.

But the fact remains both the Coalition and the commission have focused on labour market interventions when jobs for young people not in full-time education are still shrinking.

Labour market interventions need to be complemented by education interventions.

The contribution of full-time education to reducing 18-24 youth unemployment is massive but rarely analysed.

Although over 840,000 18-24 year olds from England are in full-time higher education only 265,000 are in full-time further education. And while 165,000 18 year olds are in full-time further education only 100,000 are aged 19-24.

If full-time FE matched anywhere near the numbers in full-time HE deep inroads could be made into the half a million unemployed 18-24 year olds not currently in full-time education.

But expansion of full-time FE for 18-24 year olds seeking a first Level 3 requires a maintenance support system - divorced from Jobseekers Allowance - in line with full-time HE students. Then, maintenance support could become a trampoline into work for full-time FE students just as it is now for full-time HE students.

Obviously, a new system of FE maintenance support for 18-24 year olds would have to be fair to the taxpayer as well as students. Grants would be preferable but loans might be the only option.

And further expansion of full-time HE is also necessary. More young people could study full-time if a proportion of the £2bn maintenance grant budget was turned into loans.

A strategy to expand full-time FE and HE could go some way to help prevent a ‘lost generation’ of young people.

Mark Corney is policy adviser to the Campaign for Learning and writes in a personal capacity

*Building Engagement, Building Futures, Pour Strategy to Maximise the Participation of 16-24 Year Olds in Education, Training and Work, HM Government, December 2011.

**The Economic Value of Apprenticeships, City & Guilds, February 2012.

***Youth unemployment: the crisis we cannot afford. ACEVO, January 2012

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