PROFESSOR MAGUIRE, HONORARY PROFESSOR AT UNIVERSITY OF BATH – WRITTEN EVIDENCE (YUN0015)

Youth Unemployment inquiry

Introduction

1.              I am Honorary Professor at the Institute for Policy Research (IPR), University of Bath, Associate Fellow at the University of Oxford’s Centre on Skills, Knowledge and Organisational Performance (SKOPE) and a Visiting Fellow at the Centre for Social and Economic Research (CASE) in Poland.  For over 30 years, my work has focused on researching youth transitions, in particular, the lives and experiences of disadvantaged young people. This has included leading large-scale and multidisciplinary studies to research and evaluate policies and programmes targeted at young people who are not in education, employment or training (NEET), as well as young people who face barriers to continued learning. I have advised policymakers both nationally and internationally.

Challenges

The labour market

2.              It is widely agreed that the economic impacts of the Covid-19 pandemic will lead to young people being among the hardest hit, with youth unemployment and economic activity likely to rise to levels last seen in the early 1980s[1].The Resolution Foundation’s recent coronavirus survey showed that ‘one-third of 18-24-year-old employees (excluding students) have lost their jobs or been furloughed, compared to one-in-six prime-age adults’[2]. The industrial sectors which will be most affected by job-cuts, notably, non-food retail, hospitality, travel, the arts and entertainment are those which employ a large number of young people.

Policy and institutional capacity

3.              An important factor which is largely ignored in debates about youth unemployment is the difference between the UK government and the devolved administrations in their approaches to addressing this problem.  The oversight of policy relating to young people who are not in education, employment or training (NEET)rests with the UK government, as well as with the devolved administrations in Northern Ireland, Scotland and Wales. It also cuts across a number of different agendas, including benefits, welfare, education, and employment and skills.  Evidence from recent research on NEET policy across the four UK nations highlights differences in terms of NEET support and interventions[3]. A key example here is the response to the impact of austerity measures and budget cuts, which has led to the funding of interventions becoming increasingly diversified. Whereas in England there has been greater reliance on philanthropic and social finance and support, the devolved administrations have increasingly relied on EU supported initiatives to provide a vital funding stream. Clearly, there is great concern about how this funding could be sustained or replaced post-Brexit, in the absence of a UK-wide commitment to sustained funding through the Shared Prosperity and Levelling Up Fund [4].

4.              Of some concern is that the actual scale of the problem facing policymakers may be underestimated through the definitions used, notably in relation to the NEET group. In the UK, this group of 16-24-year-olds includes both those who are unemployed and those who are ‘economically inactive’, i.e. young people who are not actively seeking work, largely due to ill health and/or caring responsibilities and hence comprises a much wider population of young people.  As is evident from official statistics, the reality is that less than half of the NEET group are classified as ‘unemployed’.

“Of all young people in the UK who were NEET in October to December 2020, an estimated 44.3% were looking for, and available for, work and therefore classified as unemployed; the remainder were either not looking for work and/or not available for work and were classified as economically inactive.”[5].

5.              This is significant because most policy intervention has traditionally and most recently focused on re-engaging the young unemployed, leaving the NEET economically inactive group side-lined and welfare dependent for long periods of time and far less likely to receive any form of positive support or intervention. The predominance of economic inactivity within the NEET group is not peculiar to the UK, as it remains a ‘hidden’ problem in many countries across the EU and internationally.

6.              Another feature of the UK NEET figures is the over-representation of young women in the economically inactive category, due to their propensity to assume caring responsibilities.  Men are more likely to be in the unemployed category[6]. The position of economically inactive young women is largely absent from any debate, although recent research has highlighted how this status disproportionately impacts on their lives and leads to their propensity to experience long-term social and economic exclusion[7].

7.              Current UK government plans to tackle impending high youth unemployment rates include: an expansion of work coaches at Job Centres to support young people; the creation of Youth Hubs; the introduction of the Kickstart programme, which will provide six-month work experience placements to young people; and increasing the number of traineeships and apprenticeships[8]. Crucially, eligibility for Kickstart is dependent upon a young person claiming Universal Credit (UC), thereby excluding large numbers of young people who are not claiming UC or are in receipt of other forms of welfare support, such as Employment and Support Allowance (ESA). This targeting of only those young unemployed who are claiming UC effectively misses out large numbers of the NEET population.

Welfare Support

8.              Apart from in Northern Ireland, primary responsibility for managing welfare support for all groups (including 16-24-year-olds who are NEET) rests with the Department for Work and Pensions (DWP). However, rather than DWP playing a significant role in mapping, tracking and supporting the NEET group, research evidence suggests that many young people fail to register for welfare support within the UK[9].  This propensity for young people to shun any engagement with public employment services is characteristic across Europe[10].

9.              Furthermore, research found that ‘official statistics suggest that young people are disproportionately affected by the DWP sanctions regime’[11].  As a result, their payments are suspended for set periods of time, leaving them marginalised and disengaged from formal employment and support services. Another study estimated that young men were almost twice as likely as young women to be sanctioned[12].

Jobs and employment

Lessons learned from youth labour market policy interventions

10.              While it is widely acknowledged that there is no single ‘silver bullet’ to address escalating levels of youth unemployment/NEET rates, key considerations to be taken into account when developing potential policies to address youth unemployment, are:

• the economic context
• an appraisal and understanding of the target group
• identifying parts of the economy that have potential for growth[13].

11.              In most cases, some form of active labour market policy (ALMP) has been implemented to prevent and reduce unemployment, including for young people who are NEET. Different ALMPs are designed to reduce various types of unemployment, whether cyclical, structural or – together with measures that support disadvantaged groups which may have additional barriers[14]. They tend to vary substantially between: a) ‘work first’ strategies, where the focus is on a rapid reduction of unemployment; and b) ‘train first’ strategies, where a more sustainable integration into the labour market is sought[15].

Types of ALMPs

Job-search assistance measures

12.              By focusing on early intervention to encourage targeted and informed job searches, these can be as effective as more expensive programmes, such as job creation and job subsidies. As well as being cost-effective and applicable to different occupational settings, they can lead to sustained employment[16]. When introduced as soon as an individual becomes unemployed, they reduce the risk of longer-term unemployment.

13.              In substantive programmes, such as the European Youth Guarantee and the New Deal for Young People in the UK, a job-search assistance element was included to accompany more general training and employment elements[17].

Example: Youth Obligation Support Programme (YOSP) (GB), operated by DWP 2017-2020.

Training programmes

14.              Training programmes to support young people’s transitions into the labour market have been introduced in many countries over a considerable period of time. Overall, however, their impact has been found to be insignificant, or even negative, especially when classroom-based training was provided[18]. As a response to mass unemployment, they have been criticised for ‘warehousing’ young people, without enhancing qualification attainment or progression to the labour market[19].

15.              Furthermore, evaluations of training programmes targeted at disadvantaged young people, together with their funding structures, have been criticised for focusing predominantly on measuring ‘hard’ outcomes, such as numbers becoming employed, rather than taking ‘soft’ outcomes, such as ‘distance travelled’ into consideration. As a result, young people who are ‘nearer to the labour market’ are recruited to the programmes, in preference to those who require sustained and supported intervention before they can access employment.

16.              While apprenticeship programmes can assist access to jobs in times of recession, evidence suggests that employers can be reluctant to recruit young people, especially if they have no or low-level qualifications[20].

Example: Youth Training Scheme (UK) 1983-1990

Subsidised employment

17.              Subsidised employment, through wage subsidies or wage cost subsidies, has a positive impact on employment outcomes, especially if they are targeted towards young people from disadvantaged groups[21]. In addition, they can maintain the attachment of young people to the labour market and offer employers training subsidies as an incentive to continuing to recruit young people.

18.              A caveat, here, is that, while wage subsidies can have a positive impact in the short run, substantial deadweight and substitution effects can occur.

Examples: Future Jobs Fund (GB) 2009-11; Jobs Growth Wales (2012 – to date) and Scotland’s Employer Recruitment incentive (2015 - recently succeeded by No One Left Behind Employability Funding Stream).

Direct job creation and public employment programmes

19.              Job creation and public employment programmes provide young people with a degree of attachment to the labour market, especially during a recession. When combined with vocational training, they become more expensive to implement. A macroeconomic study of EU member states concluded that older groups in the 20-24 age cohort were more likely than younger groups to benefit from job creation programmes[22]. This was attributed to older groups having experienced prolonged detachment from the labour market, and from education and training interventions. Other studies have shown that public works can help more disadvantaged groups (including young people), as they provide participants with some form of income in the absence of little or no welfare support[23].

Example: Kinofelis Programme (Greece) 2011- to date

Start-up subsidies, self-employment assistance and support

20.              Policymakers in many countries favour the implementation of programmes that encourage young people to become self-employed, usually as a subsidiary component of an overall attempt to reduce youth unemployment. However, take-up rates tend to be low, due to young people’s shortage of skills and experience, and a lack of funding and support[24].

Example: Prince’s Scottish Youth Business Trust (1983- to date)

Multi-element programmes

21.              In some cases, multi- element programmes provide an integrated offer. This may include a combination of job search and counselling, education and training, wage incentives and job creation. Recent evidence has concluded that programmes which integrate a number of interventions and services are more likely to be successful in improving young people’s employment outcomes[25]. Crucially, being underpinned by effective and efficient profiling and follow-up systems was pivotal to their success.

Examples: New Deal for Young People (UK) 1998-2009, Youth Contract (GB) 2012-2015

Youth Guarantees

22.              Youth guarantees have the capacity to ensure young people are given an offer of education, employment or training in a prescribed time period and can reduce the risk of them being locked into long-term unemployment/economic inactivity. The most high profile and large-scale example of this type of offer is the European Youth Guarantee, which was set up in 2013 with an estimated budget of €6.4 billion. There is no systematic evaluation of the programme across all EU member states, although specific country-level studies have been conducted. However, a 2017 audit report concluded that, while progress had been made, the main goals of the Youth Guarantee had not yet been achieved. The main barriers to its implementation were:

• funding restrictions in regions with high unemployment/NEET rates;
• the ability of Public Employment Services to employ outreach services, which restricted take-up rates among hard to help/reach groups; and
• inadequate management information data[26].

The effectiveness of youth employment programmes

23.              Characteristics of programmes which have been found to be effective include:

• being closely targeted;
• outreach services;
• the provision of intensive support for young people furthest away from the labour market;
• having pre-vocational programmes for low-skilled young people
• multi-element programmes forming an integrated offer, and
• having effective and efficient profiling and follow-up systems.

Conclusions

24.              The economic impact of the COVID-19 pandemic will result in increased youth unemployment in many countries. Many programmes and interventions have been introduced to prevent high incidences of youth unemployment and inactivity. It is crucial that their performance is assessed before lurching into immediate policy responses. Research evidence tells us that introducing ‘knee-jerk’ policies without understanding the needs of young people and the labour market can be both costly and damaging.

25.              In combination, the high volumes of young people who fail to claim welfare support and the degree of sanctioning point to alarming levels of ‘hidden’ youth unemployment, inactivity and disengagement across the UK. Moreover, the focus on youth unemployment is too narrow, as it negates over half of the NEET population who are defined as economically inactive. Issues about the nature, range and take-up of support services and provision available to young people and the variability that exists across the UK, point to the need for greater coherence and consistency.

26.              Programme evaluation has highlighted the importance of targeting. This is dependent on having tracking systems that can produce robust, reliable and efficient data on young people’s intended and actual destinations, alongside accurate labour market information, which is sensitive to the needs of regional and local labour markets.

27.              It is vitally important that programmes and interventions meet the needs of all groups of young people, including the hardest to help/reach and young people who are defined as economically inactive, due to their caring responsibilities or ill health.

28.              Establishing or maintaining services that facilitate early identification and early intervention are critical components that improve the effectiveness of ALMPs. This process is enhanced by offering young people who require support an individualised and person-centred approach.

29.              On-programme support and follow-up once young people enter the labour market are also likely to improve sustainability impacts.

30.              The evidence suggests that a one-size-fits-all approach simply will not work and that a range of interventions, will be needed to meet the needs of a diverse population.

31.              The cost of delivering such ambitions may be high, but the cost of failing successive generations of young people is totally unacceptable.

10th May 2021