Youth Unemployment: Another Lost Generation?

The labour market statistics released last week show that headline unemployment jumped from 2.57 million to 2.62 million, or from 8.1% to 8.3%. Such growth is worrying: the increase of 0.2 points from the figures released in October is only the fourth time unemployment has hit 8% since the three months to November 1996, and represents an increase of 0.4 points for the quarter.

Below the surface, two even more troubling trends emerge. Firstly, youth unemployment continues to grow at an alarming pace, with the number of unemployed 16 to 24-year-olds breaking the one million barrier for the first time. Secondly, with over 633,000 claiming unemployment benefits for in excess of six months, the tendency is towards long-term unemployment. The risk of another “lost generation” is a very real prospect if effective action is not taken to enhance employment prospects.

The detrimental effects of prolonged periods of unemployment are increasingly being recognised. This is particularly true of the impact on young people, vulnerable not only to having their confidence rocked but also to future wage scarring. The problem of long-term youth unemployment is therefore particularly potent, with 133,800 of those long-term claimants being aged 18-24.

While the number of apprenticeship starts has continued to increase, not enough is being done to advocate the apprenticeship route. With fewer than 10% of employers in England offering pacements, the number of apprentices in Britain remains low by international standards. A further narrowing of employment opportunities through the scrapping of the Future Jobs Fund has undoubtedly worsened the situation, which has been further exacerbated by the increased financial burden on those in further and higher education.

The axing of Education Maintenance Allowance (EMA) in January 2011 has been especially problematic, meaning that students from some of the poorest households will lose out on up to £1,170 per year. This withdrawal of financial support has clearly impacted negatively upon the affordability of further education: with some Teesside colleges previously having 50% of students in receipt of EMA, enrolment rates have fallen by 15%. The removal of EMA has undoubtedly been a factor, pushing up the real cost of education and potentially damaging future employment prospects.

Similarly, with changes to tuition fees regulations allowing charges of up to £9,000 per year, university applications have experienced a similar decline. UCAS has released figures suggesting that applications are down 9% year-on-year, with Teesside University receiving 15% fewer applications when compared to 12 months earlier. If college enrolment continues to fall, university applications are likely to continue to plummet and the skills base of the youth of today will decline.

As the economy continues to falter, with youth unemployment rising and job opportunities falling, it becomes increasingly obvious that creating additional financial hurdles to further and higher education has been damaging. Such steps, aimed primarily at making savings, are not providing a strong foundation for long-term economic growth.