YOUTH EMPLOYMENT GROUP (YEG) – WRITTEN EVIDENCE (YUN0029)
Youth Unemployment Committee inquiry
This submission has been submitted by the Youth Employment Group (YEG). The YEG was established jointly by Institute for Employment Studies, Impetus, The Prince’s Trust, Youth Employment UK and Youth Futures Foundation in March 2020 and now has over 230 member organisations. The group was set up to respond to the escalating youth unemployment crisis facing the UK following the coronavirus pandemic, with a particular focus on disadvantaged young people’s engagement in education, employment or training.
1.1 Prior to the onset of the COVID-19 crisis, there were already 760,000 young people not in education or employment in the UK. Then, when the pandemic struck, young people were hit hard by the effects of COVID-19 on the labour market. According to recent PAYE figures, young people account for three fifths of the total fall in employee jobs and the overall employment rate from the LFS has fallen by 5.1 percentage points, from 55.6% to 50.1%. This is the largest annual fall since 2009, and is now at its lowest since 2013. However, we have averted a far greater catastrophe for youth employment for two key reasons: first, the impact of the Coronavirus Job Retention Scheme, which at its peak was paying the wages of nearly two fifths of young workers; and secondly because of a flight to full-time education by young people (with participation now at its highest ever rate).
1.2 Research by IES and Youth Futures Foundation (2021) shows that the year-on-year fall in youth employment has been driven in particular by significant declines in elementary jobs – i.e. the impacts of the crisis on hospitality and leisure – and somewhat more surprisingly by falls in care jobs. Analysis also pointed to significant falls in employment in construction and skilled trades, machine operatives and leisure jobs. We also found that within shrinking occupations (for example, leisure, travel, care and low-skilled hospitality roles) young people were particularly badly affected – with employment falling by 15% for young people in those jobs (compared with a 10% fall in those jobs overall).
1.3 The evidence relating to “scarring effects” shows that young people who spend long periods of time unemployed go on to earn less, have worse health and are likelier to be unemployed in the future. As well as the extra financial costs associated with universal credit, unemployment is a drag on the wider economy; young people who have spent a spell out of the labour market tend to be less productive once they are back in it.
1.4 Furthermore, young people facing the greatest barriers to employment are likely to need considerable support over several years, even as the economy begins to expand. The overriding goal must be to reduce the labour market inequalities faced by groups such as care leavers, young people with few (if any) qualifications, young people from ethnic minority groups and those living in areas of the country that need ‘levelling up’. According to research from IES and Youth Futures Foundation (2021), the fall in employment is four times higher for young Black people and nearly three times higher for young Asian people than for White young people. Research by the London School of Economics in August 2020 found that in all the previous recessions covered by their analysis, those with the lowest level of qualifications and ethnic minorities were disproportionately affected by the economic downturns. Recent analysis by the Resolution Foundation of those who left education after the financial crisis showed that “while employment scarring effects for graduates reduce after one year and end after four; they persist far longer for non-graduates.” Research published by The Prince’s Trust and Learning and Work Institute finds that the sectors and occupations most likely to see jobs growth as the economy recovers are those where young people are significantly under-represented.
1.5 Cross-government coordination and transparent reporting will be essential. However, at present, no minister or government department has overall responsibility for ensuring that all young people make successful transitions into post-compulsory education, training or decent work. A Cabinet Office taskforce, with direction from No 10, shaped by the voices of young people from marginalised backgrounds, should be established to raise this issue to the highest levels and coordinate the necessary provision. It is imperative that we agree what success looks like and hold ourselves and government accountable for delivering it.
1.6 It is this desire to help young people facing barriers to accessing employment that brought the Youth Employment Group together a year ago, and it remains our guiding mission. The whole system must work better for young people, particularly those who face the greatest obstacles to finding a meaningful and sustainable job. Long-term youth unemployment did not peak until five years after the start of the financial crisis in 2008. We cannot, and should not, wait that long before young people get the support they need and deserve this time around.
2.1 The YEG has a sub-group on employers which is currently exploring the key challenges and barriers that they face recruiting young people. Employers report that the landscape is very complex and creates barriers to engagement, particularly for SMEs. The range of different schemes available, without clear progression routes between the schemes, also causes confusion. They also report a lack of join up between moving from one scheme to another, e.g. Kickstart to apprenticeships.
2.2 It is financially less appealing for employers to offer lower-level apprenticeships aimed at younger people since the apprenticeship levy creates incentives for offering higher-level apprenticeships. The trend towards older learners and higher-level training has been accelerated by COVID. If you compare March-July 2020 with March-July 2019, apprentices aged 25+ made up 62% of starts compared to 55% in the previous year and Level 2 apprenticeships made up 26% of starts compared to 36% in the previous year. The incentive payments for employers of £3,000 for new apprentices of any age is not helping reverse this trend. The incentive payments for employers of £3,000 for new apprentices of any age could be more targeted. We believe that they should be weighted to younger people: £5,000 to any employer who takes on an apprentice aged 16- 18 or aged 19-24 if they have an Education, Health and Care plan or have been in Local Authority care, and £3,500 to any employer who takes on an apprentice aged 19-24.
2.3 Many employers have accessed the Kickstart scheme but some have reported to YEG members that they have had no choice but to delay their Kickstart placements due to the economic conditions. For example, some employers have lost key members of staff involved in recruitment and training (either permanently or temporarily through the furlough scheme), which inevitably makes it more problematic to organise and provide placements to young people while also offering the necessary support and mentoring. Some placements have just not proved feasible in lockdown conditions. With delays in the system, it is logistically very challenging for employers to ‘make up for lost time’ by arranging the same number of total placements over a shorter time period in the run-up to December 2021. It is far more likely that these delays will simply result in ‘lost placements’ that are not delivered before the end of this year. Employers should be afforded more time to create Kickstart jobs, given that the original timeframe was envisioned last summer when it appeared that the lockdown restrictions were easing sooner.
2.4 Other feedback that we have received regarding Kickstart relates to the desire to plan consecutive placements. They would ideally need at least an 18-month window in which to plan consecutive placements that allow them to fully engage with Kickstart rather than simply offering a single Kickstart placement and then withdrawing. When Kickstart was first announced, employers had an opportunity to plan for at least three six-month cycles of placements, spanning the 18 months from mid-late 2020 through to late 2021. If employers were quick off the mark and were large enough to meet the requirement to deliver at least 30 Kickstart jobs themselves, three cycles might have been possible. However, the delays for many employers have subsequently made it much less likely that this aspiration for multiple placements can be met. Furthermore, smaller employers who, since January, are now able to engage directly with Kickstart without going through an intermediary might wish to follow the same cycle-based approach, but this will not be possible if Kickstart placements are brought to an end in December. An extension of the scheme would promote significantly higher employer engagement with the scheme – particularly among SMEs – which will in turn allow Kickstart to support more young people.
2.5 Kickstart will also hopefully prove an effective route into apprenticeships and employers have reported to us that they are keen to offer Kickstart placements as soon as possible so that the young people they recruit are ready and able to begin an apprenticeship. The extension of Kickstart would embed this as a cyclical route into apprenticeships, ensuring that the DWP scheme contributes to the work of other departments who are seeking to support young people.
2.6 The issue of bringing education and employers together to ensure that the education system is effectively preparing young people for employment is a recurring theme in conversations with employers. Businesses have been saying for some time that they are not getting young people from any level of the education system with the human skills required to succeed in employment, which also prevents them from using their technical skills and qualifications effectively. This is a key risk – and cost – to taking young people on and means that many young people miss out on opportunities in a competitive job market.
2.7 Employers also report nervousness about getting involved in government schemes in case there are reputational issues and they have the spotlight shone on them. This can create a barrier to engagement in initiatives.
4.1 We welcome that government has announced very significant investment in measures to support those out of work, with around £7 billion committed through the Plan for Jobs. We think the immediate priority should be to ensure that this is a coherent offer that delivers a meaningful guarantee of a job, education or training place for all young people. Furthermore, while the scale of investment in labour market measures has been welcome, the government has focused far less on investing in skills and training support. We think that there is a strong case for additional investment in careers services, apprenticeships, and in ensuring that Further Education colleges are able to guarantee places for all young people who wish to (re)enter post-16 education.
4.2 To ensure funding reaches those young people who fall outside the system, government needs to ensure that the Community Renewal Fund and Shared Prosperity Fund (as replacements for European Social Funds) focus significant investment in NEET young people.
6.1 Employability services have become more difficult to access during lockdown, with some services having to pause altogether while others have tried to adapt to providing services online. The announcement of an additional £32 million from government to expand the NCS was therefore a welcome step. Nevertheless, recent research undertaken by the YEG found that 45% of young people either had no careers advice or employment support during lockdown or had received only one such contact from their school, college, university or other organisation - further exacerbating the existing disparities for those who face additional barriers to sustainable employment.
6.2 Entrepreneurship should also be covered in careers education on a par with other career routes and choices in secondary schools, colleges, sixth forms and in university.
6.3 The YEG would like to see government building on the new funding for additional careers advisors by ensuring that all young people can access their entitlement to high-quality personalised guidance and advice:
a) Local Authorities, Combined Authorities and the Education and Skills Funding Agency (ESFA) should map existing careers information, advice and guidance (IAG) and traineeship / apprenticeship options as well as commission flexibly to scale-up infrastructure and delivery partners from the voluntary sector where gaps are identified; b) The available provision, including the NCS, education and training providers, JCP, youth work / mentorship programmes and online-only support and training initiatives should be actively promoted to young people and employers by Local Authorities and other stakeholders to ensure that all young people can find and navigate resources and services; c) Employability support services of all types (statutory and non-statutory) should be informed by the evidence base on ‘best practice’ - including the role of 1:1 support, continuity of advisor support, integrated, comprehensive and holistic approaches for disadvantaged groups and use of ‘cultural magnets’; d) Services must also be informed by an understanding of what young people want and need, facilitated by consultations with young people themselves; Priority should be given to offering advice and guidance to young people with additional and complex needs, the ‘digitally excluded’, those from Black, Asian or Minority Ethnic backgrounds and young people leaving education this year who may have missed the support normally available through their school or college.
9.1 Businesses have a key role to play in creating a thriving job market for young people and the YEG suggests launching a campaign to create quality pre-employment and employment opportunities for young people, underpinned by the ‘Good Youth Employment Charter’:
a) Encourage employers to sign up to the Charter, which is based on five principles: creating opportunity; recognising talent; fair employment; developing people; and youth voice.
b) Work with Combined and Local Authorities to promote the Charter to employers in their areas, including the benefits such as receiving the ‘Youth Friendly Employer Badge’ that employers can choose to display as well as becoming listed on the ‘Youth Friendly Employer database’ searchable by young people. Employers will also then have the support to develop quality employment or training programmes for young people as part of their Membership of the Charter.
9.2 Businesses and universities should also focus on empowering communities to support young people. The new ‘Youth Hubs’ that bring together different local partners are a promising way of transforming the landscape for young people in the long term and can help ensure there is ‘no wrong door’ for young people who do not engage with Jobcentre Plus. These need to be properly resourced as a hub for all local partners, employers and institutions to provide joined up support.
10.1 Government needs to prioritise opportunities for unemployed young people in its apprenticeship programme and provide support to employers to deliver this. This could involve the following:
a) Make the existing apprenticeship ‘incentive payments’ to employers more generous (£5,000 to any employer who takes on an apprentice aged 16- 18 or aged 19-24 if they have an Education, Health and Care plan or have been in Local Authority care, and £3,500 to any employer who takes on an apprentice aged 19-24);
b) Abolish employer co-investment for SMEs (<250 employees) if the apprentice is under 25;
c) Introduce a 10% co-investment rate for apprentices aged 25 and over;
d) Remove Level 7 apprenticeships from the scope of the Apprenticeship Levy;
e) Allow employers to re-allocate up to 10% of their levy contributions towards approved pre-apprenticeship programmes such as Traineeships and rigorous VCSE schemes;
f) Provide funding to enable employers to recruit and support disadvantaged apprentices (e.g. outreach; travel; pastoral support; additional academic support);
g) Create a national target for 75% of apprentices to be under 25, and over 50% of apprentices to be new starters as opposed to existing employees;
h) Revise the public sector apprenticeship target so that it focuses recruitment on young and disadvantaged learners.
10.2 The YEG would like to see an urgent consultation to understand why the number of young people starting an apprenticeship has fallen sharply in recent years – a trend that COVID-19 has accelerated. A sector-wide government consultation should highlight the main issues and propose a range of solutions by the end of this year.
11.1 A key lesson from the last crisis, both in the UK and internationally, was that having clear and unambiguous guarantees for young people – of an education place, training or decent job – drives behaviour change and helps to ensure that no young people are left behind.
11.1 While the YEG recognises the scale and pace with which the government has had to deliver on its ambition to support youth employment through the crisis, it must also continue to build the evidence base of ‘what works’ to help young people move from education into sustainable work so that important lessons can be learned both now and for future generations.
11.2 Youth Futures Foundation (co-chair of the YEG and an affiliate of the What Works Network) is building the evidence base around what works to support young people from marginalised backgrounds into good jobs. They learn from the projects they fund and scale up the learning to drive genuine, long-lasting systemic change. Youth Futures could work more closely with DWP to commission external independent evaluations of recent, new or augmented initiatives including Youth Hubs, the Expanded Youth Offer and the Kickstart scheme. A paper from IES and Youth Futures Foundation (April 2020) highlighted what the evidence tells us about what works to support disadvantaged young people into meaningful work. Effective practice includes:
11.3 We need to we need to learn from what is being funded right now in the UK, and ensure the right data and information is underpinning it. The government should design more accurate and robust measures for measuring the activity and progress of young people.
a) A non-LFS measure of ‘youth inactivity’ should be formally developed and monitored, with reducing youth inactivity becoming a policy priority alongside tackling youth unemployment.
b) The DWP should establish a workstream to ensure that key stakeholders across all sectors have access to the information they need to reduce youth inactivity and youth unemployment. This workstream should look at three major areas:
(i) What additional data is needed by decision makers and how can it be collected?
(ii) What existing data can be shared with decision makers, and how can processes for data-sharing be made more efficient?
(iii) What barriers are there to more effective data-sharing (e.g. the lack of legal gateways) and how could they be overcome?
c) A relaunched data advisory group should be given a mandate from the DWP Secretary of State to work with the sector and across government departments. At a minimum, this group should include senior members of the DWP and DfE analyst teams, DWP and DfE NEET / youth policy teams and representatives of the YEG.
d) The above workstream should consider issues such as early warning systems for young people being made redundant (e.g. RTI), how more Universal Credit administrative data and data on inflows / outflows could be used to provide better targeted support within the DWP system and to its local partners, and what data the Employment Datalab needs to enable the effective evaluation of youth employment interventions (in particular, LEO).
13.1 The YEG want to ensure that no young person is left behind and would like to see an Opportunity Guarantee which ensures that young people get the help they need to move into education, training or work and, if they are out of work for over six months, they are guaranteed a job or training place. This ‘guarantee’ should translate into one-to-one support for all 16 to 24-year-olds accessing a job centre, not just those who are claiming Universal Credit.
13.2 Local areas with the strongest economies are likely to draw down more money than weaker areas as we emerge from the national lockdown, even though initiatives, such as Kickstart, would have a greater impact in areas struggling with the highest levels of long-term youth unemployment. Government should therefore consider ‘ringfencing’ funding for each region to ensure that it is allocated evenly and fairly across England. Moreover, the sectors most affected by the economic downturn (which may struggle to return to full capacity in the coming months and years) are generally those that attract a large proportion of younger workers in a typical year. As the country begins to emerge from lockdown this year and next, Kickstart (and any future schemes for young people) could therefore provide a strong platform to upskill and reskill young people to work in new and growing industry sectors such as logistics, healthcare and the ‘green economy’.
13.3 We should stop talking about regional differences and take a much more tailored, local approach. Impetus' Youth Jobs Gap research shows disadvantaged young people are twice as likely as their better-off peers to not be in education, employment or training (NEET). With the support of KPMG and London Councils, Impetus took deep dives into different English regions. While the differences between the regions are small, differences within regions are large – a young person educated in Sandwell is twice as likely to be NEET as a young person educated in Warwickshire. And there are big differences between different parts of combined authority areas too. To tackle youth unemployment, it doesn’t make sense to target a specific region – we need to focus at a much more local level.
10th May 2021