By Claire West
The UK clearly has a serious youth unemployment problem but severe difficulty is being felt by only a relative minority of young people and the current situation is not worse than ever before. The widespread perception that 1 in 5 16-24 year olds are unemployed is based on a narrow and somewhat misleading interpretation of official statistics while talk of a ‘lost generation’ of young jobless people is simplistic.
This is the key conclusion from the latest Work Audit report on official labour market statistics — Getting the measure of youth unemployment - published today by the Chartered Institute of Personnel and Development (CIPD).
The report finds that the current scale of youth unemployment is only properly understood in the context of greatly increased participation in post-16 education in recent decades. This, plus the fact that almost 30% of young people classified as unemployed by the Office for National Statistics (ONS) are in full-time education, distorts public perception of both the level and rate of youth unemployment. According to the CIPD it is at present more accurate to say that 1 in 8 rather than 1 in 5 16-24 year olds are unemployed. The Institute is therefore calling on the ONS and the Department for Work and Pensions to issue a joint statement on the measurement of youth unemployment to help establish a better informed policy narrative on causes of and solutions to the problem.
Dr John Philpott, Chief Economic Adviser, CIPD, comments:
“The conclusion that 1 in 8 young people are unemployed rather than the frequently cited but misleading figure of 1 in 5 provides no comfort to those without work. But a more realistic picture of the scale of the problem would help move the policy narrative beyond the simplistic ‘lost generation’ rhetoric. Aside from ensuring that fiscal and monetary policy are conducive to growth and job generation the principle policy focus should be on how best to reduce underlying structural youth unemployment which is probably close to the 9%-10% rate observed prior to the recession and likely to persist even when the demand for labour eventually picks up.
Dr Philpott continues:
“Especially worrying in this respect is the observation that core youth unemployment is not only far worse than desirable but itself appears to have had been getting worse for a few years prior to the recession, suggesting that either the employability of the core youth jobless is deficient and/or that the cost of employing them is too high relative to their labour market value. This implies the need for faster progress on vocational skills and welfare policy, a thorough review of the effect of the national minimum wage on youth employment and an assessment of the case for reducing national insurance contributions for employers hiring young people with limited skills.”