Britain's youth employment crisis is a pressing issue, with the country slipping down the global rankings. A recent report from PwC highlights a concerning trend: the UK's economy is losing out on £26 billion annually due to regional disparities in youth joblessness. This alarming statistic underscores the need for immediate action to address the growing crisis.
The report's annual youth employment index reveals that the UK is lagging behind other advanced economies. While the youth unemployment rate has reached a 10-year low, other nations are making strides. This disparity has led to a decline in the UK's ranking from 23rd to 27th among 38 OECD countries, with countries like Mexico, France, and Estonia surpassing the UK.
The situation is further exacerbated by the rising number of young people (16-24 years) who are not in education, employment, or training (NEET). This figure has reached almost one million, a concerning development. Labour's response includes a 'youth guarantee' program, offering six-month paid work placements for eligible 18-21-year-olds on universal credit for 18 months. Additionally, Work and Pensions Secretary Pat McFadden announced 350,000 new training or workplace opportunities for young people on universal credit.
However, business leaders express concerns about the rising costs of hiring young people due to tax increases, higher minimum wages, and employment rights bills. This could potentially price young individuals out of the job market. Clare Lombardelli, a deputy Bank of England governor, shares these worries, citing striking data on the youth employment situation. Official figures indicate a 15.3% youth unemployment rate, the highest since 2015, and more than three times the overall jobless rate for those over 16.
The impact of this crisis is evident in the loss of jobs among young people. Guardian analysis reveals that almost half of the jobs shed since Labour's inception are from individuals under 25. PwC suggests that addressing this trend could significantly boost the economy. Narrowing the gap with Northern Ireland, which has the lowest NEET rate at 9%, could add £13 billion to UK GDP. Closing the gap entirely would result in a £26 billion boost.
London and Scotland stand to benefit the most from these potential gains, as they have the highest NEET rates, with up to 15% and 16% of young people aged 16-24 not working or learning. Marco Amitrano, a senior partner at PwC UK, emphasizes the urgency of the situation, stating that a generation's future, productivity, and prosperity are at stake. The government's response remains pending.
