TRADE UNION CONGRESS – WRITTEN EVIDENCE (YUN0048)

Youth Unemployment Committee inquiry

How do we create and protect jobs for young people?

Summary of submission

In this submission, the TUC sets out a number of ways that action can be taken to tackle youth unemployment and to support young people in work, either at threat of unemployment or helping them get on in work and their careers.

The challenges and inequalities facing young people in the labour market have been exacerbated by the Covid-19 pandemic and its impact on the economy. The pandemic has accelerated other societal changes - how we all live and work will change in the future. For young people these changes will have significant impact on their working lives. To help protect and support them, the following needs to change:

Furlough – the Job Retention Scheme should be continued for as long as it is needed. Furlough rates amongst women and men under 18 are 39 per cent and 28 per cent respectively. For 18–24-year-old women and men they are at 22 per cent and 19 per cent respectively. The average for women and men overall is 15 per cent for women and 14 per cent for men.[1]Winding down and ending the scheme early puts those young people more likely to be furloughed at unnecessary risk.

Universal Credit – the basic level of universal credit and legacy benefits, including jobs seekers allowance and employment and support allowance, should be raised to at least 80 per cent of the national living wage (£260 per week) and the five-week wait for the first payment ended.

Job creation – Young people are more affected by unemployment than other working-age groups. It has a long-term scarring impact on future pay and employment procurement. It is important that there are new jobs for young people who do lose work. We need to see the government investing now to help create jobs in the coming years. Research carried out for the TUC by Transition Economics reveals that fast-tracking spending on projects such as broadband, green technology, transport and housing could deliver a 1.24 million jobs boost by 2022, and the TUC has set out plans to fill and create 600,000 jobs in the public sector.[2]

Kickstart and job guarantees – The scheme has not yet been able to deliver the number, or the quality, of jobs needed to support young people into good quality employment The government should extend the scheme past its December 2021 cut off, make sure it is available to all young people wishing to access the opportunities and create regional recovery panels to ensure good-quality, sustainable jobs are created.

Dedicated careers advice - The government should invest in dedicated careers advice services, accessible to all young people, helping them access the jobs and support available. Support and advice should be appropriate to and targeted at groups vulnerable to unemployment and inequalities in the labour market such as care-leavers, young workers with caring responsibilities, disabled young people and Black and ethnic minority (BME) young workers.

Ensure jobs are good quality – too often young people face insecure work and low pay. The government should act to raise the minimum wage to £10ph and ban zero hours contracts.

Tackle discrimination and promote equality – the government should transparently demonstrate compliance with its public sector equality duty through conducting and publishing equality impact assessments carried out in line with EHRC guidance. It should also fully implement the Equality Act 2010, bringing into force the socio-economic duty , a legal duty on public bodies to make tackling all forms of inequality a priority. Not doing so leaves some young workers at risk of being disproportionately impacted and existing inequalities deepened.

Boost investment in apprenticeships, technical education and workplace training – there are not enough high-quality apprenticeships and other pathways for young people to upskill or retrain. Increasing investment is now more urgent as young people cope with the challenges of Covid for their job prospects. The TUC has called for measures to strengthen enforcement of employment and training rights, boost wage levels, improve equality of access, and guarantee all young people and entitlement to progress to a level 3 apprenticeship.

Introduction

The Trades Union Congress (TUC) exists to make the working world a better place for everyone. We bring together more than 5.5 million working people who make up our 48 member unions. We support unions to grow and thrive, and we stand up for everyone who works for a living.

Our member unions represent hundreds of thousands of young workers in different jobs across the economy. Together, we have called for action to tackle the damaging impact of unemployment and the disproportionate impact on younger people.

Unemployment has huge social and economic consequences for individuals, families and the communities they are in. And when this turns in to long term unemployment the results can be devastating for the individual’s prospects.

Long-term unemployment leads to permanent labour market ‘scars’, including increased incidence of future unemployment, a greater likelihood of being in poorer quality work and lower subsequent earnings[3].

Not only does unemployment affect an individual’s income and career, but unemployment also impacts on wellbeing and stress, affecting both physical and mental health.

The Marmot Review in 2010 on health inequalities[4] made creating 'fair employment and good work for all' one of the six policy objectives it recommended, with particular emphasis on the need to 'reduce long-term unemployment across the social gradient.' The review noted that 'unemployed people incur a multiplicity of elevated health risks. They have increased rates of limiting long-term illness, mental illness and cardiovascular disease. The experience of unemployment has also been consistently associated with an increase in overall mortality, and in particular with suicide. The unemployed have much higher use of medication and much worse prognosis and recovery rates.'

Long-term unemployment is damaging for young people

While unemployment has a negative impact on individuals and the economy at any age, it has particularly negative effects on young people. The 2008 financial crisis and subsequent recession significantly affected young workers’ employment prospects, with the unemployment rate for 18 to 24-year olds reaching a much higher peak than for other age groups.

Young people’s unemployment (including all 16 to24 year olds) rose to over 1 million at several points during the early 2010s, including as late as 2013, when those who are 25 and 26 years old now would have entered the labour market at 18[5].

It is not just the temporary impacts of unemployment that can damage young people’s futures. Experiencing unemployment of six months or more has been shown to “scar” young people’s prospects and experiences of the labour market in the future, with impacts on their likely employment rate and earnings potential. This impact is more pronounced on cohorts that experience long-term unemployment aged under 23 than for people who experience long-term unemployment later in life.[6]

A 2012 study for the Commission on Youth Employment estimated that the impacts of long-term youth unemployment at that point would cost £4.8 billion to the exchequer and £10.7 billion to the economy in lost output that year alone. Taking into account the longer-term scarring effects of unemployment on young people, this increased to approximately £28 billion net loss to the Treasury over the decade ahead.[7]

Still recovering from the shocks of the last recession, young people today are yet again facing an uncertain future, with unemployment risking further scarring to their pay and progression prospects, and struggling to make ends meet with a social security system not fit for purpose. The immediate economic impacts of the pandemic do not account for the unknown but no doubt immense personal and economic cost coming down the line, with young people highly anxious about their future, grappling with uncertainty, insecurity and a rapid readjustment of their career and life plans.

Challenges 

1. What are the main challenges facing young people seeking employment today? How do structural factors impact youth unemployment, and how might these be addressed?

Too often, the experiences of young people in the labour market are seen as some kind of ‘rite of passage’, in which young people experience low pay, insecure work and bad treatment before then going onto get another job.

This ignores the realities of such employment for young people, and how factors beyond their control impact on their experience of finding and keeping work, as well as how good that work is.

It is important to understand that young people seeking employment are not just those unemployed, but those in work who may be looking for more secure work, better pay or looking to progress in their career.

Before the pandemic, one in ten young people were employed on a zero hours contract[8]. Insecure workers face income and job insecurity. Most miss out on key social security rights such as statutory sick pay and paid leave. Insecure workers also experience a pay penalty. The average young worker is only £42 a week better off than young workers were 20 years ago. Yet the average older worker is £95 a week better off – more than double the rate of younger workers.[9]

Pay and insecurity is clearly linked. TUC analysis shows that insecure workers are paid significantly less than employees in general. It shows that the median gross hourly pay for those in casual work amounted to £8.03 an hour in 2019, for seasonal work £8.10 and for zero hours workers £8.17. Those working for an employment agency typically received £9.69. But this is well behind the £12.25 average for all employees.[10]

When speaking to young people, they told us about their concerns with getting on at work. Young workers told us managers treat them as if they’re not serious about work, that there is a lack of development opportunities and confusion about progression routes[11]:

“I’m on the technical team but received no training. You ask your colleagues questions and pick it up.”

“We also don’t get enough training… it can be frustrating for those of us that want to develop our skills”

Research findings[12] published by the TUC on workplace training trends show that the total volume of training that workers aged 16-34 received fell by 16% compared to a decline of 10% for all workers between 2011 and 2018. It is anticipated that the growth in insecure employment and the impact of the pandemic will have led to an even sharper decline in the amount of training available to young people and young adults in more recent years.

Covid-19 has worsened the situation facing young people today.

65 per cent of job losses between January 2020 and February 2021 were among those aged under 25[13]. A key reason for this is that young workers are overrepresented in the industries hit hardest by the pandemic.

The accommodation and food service industry has seen the most job losses throughout the pandemic, with 370,000 jobs (18%) lost. Going into the pandemic (Jan-March 2020), 15 per cent of workers aged 25 and under worked in accommodation and food, compared to just 4 per cent of those over 25[14].

The three industries with the highest job losses (accommodation and food, wholesale and retail, and arts and entertainment) are also the three industries with the highest percentage of young workers in their workforce[15].

Women workers aged 25 and under face the greatest risk of all. They are six times more likely than male workers over 25 to work in the highest risk sector, accommodation and food[16].

This also helps to explain why young workers are much more likely to be furloughed. Latest furlough data to the end of February shows that young people and young women in particular are more likely to be furloughed than any other age group.

Furlough rates amongst women and men under 18 are 39 per cent and 28 per cent respectively. For 18–24-year-old women and men they are at 22 per cent and 19 per cent respectively. The average for women and men overall is 15 per cent for women and 14 per cent for men.[17]

Young workers are vulnerable to changes to the furlough scheme, such as the planned winding down and end of furlough. The TUC is calling for an extension to the furlough scheme for as long as it is needed[18], to protect the jobs of young people whilst the sectors in which they work build back up to capacity and adapt to new ways in which we may live and work in the UK.

Unemployment rates tend to always be higher for young workers. This has worsened over the pandemic as unemployment has risen mostly among young people. The unemployment rate for 16-24 year olds is now over 14%, compared to just under 4% for those over 25.[19]

Employment rates tend to be lowest for young people. Again, young people have seen this worsen more rapidly than other working age people. The employment rate for 16-24 year olds is 51% compared to 85% for 25-49 year olds and 71% for 50-64 year olds.[20]

Young workers from BME backgrounds have been particularly hard hit. The unemployment rate for young BME workers has reached 27.3% compared to 12.4% for young white workers. This tells us that BME young people who choose to work, rather than study, have a more difficult time in the labour market than their white peers.[21]

During the pandemic, the unemployment rate for BME young workers increased more than twice as fast as the unemployment rate for young white workers. The unemployment rate for BME young workers has risen from 18.2% to 27.3% between the final quarter of 2019 and the final quarter of 2020. This is a 50% increase in the rate, and a rise of 9 percentage points. Over the same period the unemployment rate for young white workers rose from 10.1% to 12.4% – an increase of 22% of the original rate, or 2.3 percentage points.[22]

The above unemployment rates measure the proportion of young people who want to work but do not have a job. They do not include young people who are inactive such as students. White young people are much more likely to be in employment, while BME young people are much more likely to be in education than their white peers.[23]

Across the pandemic, youth unemployment has risen in every region except one, the North East. Between Nov-Jan 2020 and Nov-Jan 2021, the largest rises in the youth unemployment rate were in[24]:

• The south west, a 58 percent rise from 8.4 per cent to 13.3 percent
• London, a 44 percent rise from 13.7 per cent to 19.7 percent
• West Midlands, a 28 percent rise from 14.1 per cent to 18 per cent

While the North East youth unemployment rate has fallen, the unemployment rate remains high at 16.6 percent.

More needs to be done to tackle the structural inequalities facing young BME and young women workers in the labour market, highlighted above and in our answers on apprenticeships. The government’s lack of action in tackling this is highlighted by the failure to publish an Equality Impact Assessment for it’s flagship Kickstart scheme to tackle youth unemployment. Tackling regional disparities in youth unemployment would also help with the government’s plans to ‘level up’ the UK.

Furloughed employees are guaranteed 80% of their wages, but there’s no provision to prevent workers falling below the minimum wage while they’re furloughed.

Young workers already face lower minimum wage rates and furlough pushed many below this inadequate wage floor. 423,000 16-24 year olds were paid below the minimum wage in April 2020, compared to 64,000 the previous year.[25]

The TUC has called for an increase to the minimum wage of £10 per hour, regardless of age, which would have a significant impact on young people. It would also make jobs where there are high numbers of vacancies, including in social care where there are over 100,000 vacancies[26], more attractive job opportunities.

Given this, young people start from a disadvantage in finding and keeping good work. This is why in May 2020, the TUC called for a Jobs Guarantee[27] to support those who are unemployed with good quality, meaningful job opportunities paid at the real living wage. We cover this later in the submission, with comment on how the government can improve the Kickstart scheme and learn from previously successful initiatives.

However, whilst a job guarantee will help many to find work, it is still important that a sufficient social safety net is in place for those who cannot find work, as well as those who are unable to work. 

As it stands, the introduction of Universal Credit (UC), alongside a decade of austerity policies such as the benefits freeze and the two-child limit, has left the UK with low benefits payments, a long and punitive application system, and a five-week wait for first payment that pushes people into poverty and debt. 

In response to the pandemic, the government has introduced some measures to improve universal credit, increasing the basic amount of UC by £20 per week. This means weekly payments are now around £95 per week. The rate is even lower for young people, those aged under 25 are expected to live on just £79 a week.   

It is clear further measures are desperately needed. The replacement rate (the standard benefits payment as a percentage of average weekly earnings) has fallen steeply since the 1960s. Even with the recent increase in payments, the replacement rate is 17 per cent, compared to 33 per cent in the 1960s. 

The TUC calls for raising the basic level of universal credit and legacy benefits, including jobs seekers allowance and employment and support allowance, to at least 80 per cent of the national living wage (around £260 per week). The TUC also believes that there should not be an age distinction when it comes to social security.   

2. What are the main challenges facing employers in the labour market today? What barriers do they face in recruiting young workers and setting up apprenticeships and traineeships?

Boosting access to high-quality apprenticeships  

Covid-19 has had a major detrimental impact on the number of opportunities for young people to take up apprenticeships since the first national lockdown last year. The House of Commons Library has published a new analysis[28] of the latest participation trends and the key findings are that:

• In the academic year, 2019/20, apprenticeship starts were down by 70,900 or 18% on the previous year
• In some regions the annual decline was much higher (e.g. 23% in the North East) and the youngest apprentices were hit hardest
• The fastest rate of decline was during the first national lockdown when starts fell by 46%
• There have also been significant apprenticeship redundancies, many of which have gone unreported in the official data published by the government
• In the latest period for which data is available (August 2020 - January 2021) starts were down by 18% on the same period 12 months earlier.

Last August the government introduced a financial incentive for employers recruiting new apprentices (£2,000 for apprentices aged under 25 and £1,500 for those aged 25 and over).

This had less impact on employer recruitment than anticipated and in the Budget the Chancellor boosted this to a payment of £3,000 for all new apprentices recruited up to September. While this increased incentive was welcome the TUC has called for additional policy approaches to safeguard apprentices.

For example, to combat rising redundancies we have called on the government to establish a new form of guarantee for all existing apprentices to empower them to complete their training. This ‘right to complete’ would go well beyond the existing commitment by government to try to find another employer for apprentices who are made redundant. 

Later in this submission we set out other reforms the TUC has called for to increase the number of apprenticeship opportunities and to address continuing problems with poor quality apprenticeships and under-representation of certain groups

3. What future social, economic and technological changes are likely to impact youth unemployment? What impact might these changes have, and how should this be planned for and addressed?

Young workers are over-represented in accommodation and food, wholesale and retail, and arts and entertainment industries which will be affected by changes in consumer behaviour and changes to the way we live and work as we exit the pandemic.

Managing this change is important and is why the TUC has called for a national recovery council, bringing together government, unions and business to plan for the recovery. The government must continue to engage unions and employers in developing sectoral recovery plans, and should establish formal sectoral panels with representation from unions and employers for this purpose.[29]

In our report on the industrial change to come, the TUC sets out the three drivers of change that will reshape the economy, presenting opportunities for new forms of work and posing risks of significant job losses.[30]

Digitalisation and automation

The past demonstrates that technology, broadly defined, has been one of the most significant drivers of almost all major shifts in our economy and society, responsible for both mass unemployment and the creation of new jobs, although often with a time lag. The World Economic Forum conducted a survey of businesses around the world and found that nearly 50 per cent of companies expect that automation will lead to some reduction in their full-time workforce by 2022.[31]

In tandem 38 per cent of businesses surveyed expect to extend their workforce to new productivity-enhancing roles, and more than a quarter expect automation to lead to the creation of new roles. The ONS estimate that in 2017, out of the 19.9 million jobs analysed in England, 7.4 per cent (1.5 million) people were employed in jobs at high risk of automation. Women account for 70.2 per cent of employees in those jobs.[32]

Climate change and environmental pressures

The end of the fossil fuel age is underway, and the industrial impacts are far reaching.

Global investment is flowing into clean infrastructure, the electrification of transport, and innovative new business models. The mounting awareness of untenable environmental pressures alongside innovation and changing patterns of investment in energy and infrastructure, means that there is a real risk the world economy is changing on a faster timescale than those who work in high carbon and energy intensive industries are being

prepared for.[33]

In the UK, both the Government and Opposition have locked support for green jobs into the heart of their plans for industrial strategy. Both have accepted the recommendation of the Committee on Climate Change, the Government’s statutory advisors, that the UK economy moves to ‘net zero’ emissions by 2050. Its Chief Executive, has warned that this

will mean a step-change in the Government’s climate policy actions.[34]

Changes in the global economy and trade relations

In the past 40 years, in industrialised economies, change has tended to be driven as much by market liberalisation on a global scale and the resultant entry of developing and emerging economies into production, as it has by other factors. The global economy is not short of recessionary dangers on the horizon.

The risk of housing bubbles at home, oil prices shocks from the Middle East or stock market crashes starting in Silicon Valley or China all represent real and continued threats. But for the UK, the uncertainty surrounding Brexit represents perhaps the most immediate prospect of a serious economic downturn. The long-term effects of Brexit remain unclear: depending more on the choices, values and vision of future governments than on any economic fundamentals.

4. Is funding for education, training and skills enough to meet the needs of young people and of the labour market? How can we ensure it continues to reach those who need it most?

The latest annual analysis[35] of public spending on education by the Institute for Fiscal Studies (IFS) concluded that “further education and skills spending for young people and adults has received the largest cuts across all areas of education spending over the last decade”.

In this period funding for students aged 16-19 attending further education (FE) and sixth-form colleges fell by 12% in real terms while funding per student in school sixth forms fell by 23%. This report also says that the extra £400 million for 16–19 education in 2020–21 is likely to be more than accounted for by an anticipated growth in student numbers due to Covid-related education and employment trends.

The IFS report also highlights that the largest cut in education funding over the last decade has been for people aged 19+ attending FE colleges funded through the government’s Adult Education Budget (AEB). This education pathway is crucial for young people who are pursuing vocational education and training programmes and/or who are trying to achieve (or improve upon) the qualifications that students generally follow in the 16-19 phase (e.g. GCSEs, A levels, BTECs and other vocational qualifications). According to the IFS, the allocation in the AEB for spending on classroom-based adult education in colleges has been cut by 50% in the last decade and the number of these students has nearly halved to 1.5 million in this period.

While there has been additional public spending on apprenticeships in the last decade, the IFS calculates that the combined total spend on adult education (19+) and apprenticeships (all ages) is still about 35% down on 2009–10 in real terms. Analysis by IPPR[36] has found that if FE funding had kept pace with demographic trends and inflation over the last decade, annual spending would now be £2.1 billion higher on adult (19+) skills and £2.7 billion higher on 16-19 education. While the government has announced new funding to be delivered for people aged 19+ via the National Skills Fund, the latest IFS estimate[37] is that this will only reverse a third of the cuts to the AEB since 2010.

All of this evidence points to a significant funding shortfall for young people in the 16-19 phase of education and those aged 19+ who are dependent on the Adult Education Budget for vocational courses and/or gaining qualifications they failed to achieve in school. These challenges will become more acute as technical qualifications such as T Levels are rolled out. Research on the experience of other countries shows that high quality technical qualifications of this order require significant funding levels. The IPPR estimates that per pupil spend for 16-19 years in colleges and sixth forms need to increase from £5,200 to £8,300 by the end of this parliament. The government also needs to take forward the recommendations of the Augar Review to increase spending on adult education (19+) significantly to widen learning and skills opportunities for young people and adults alike.

It is welcome that the Lifetime Skills Guarantee means that young people now have an entitlement to free courses to achieve their first level 3 qualification beyond the previous cut-off age of 23 years. However, it is a mistake that the scope of the “adult level 3 entitlement” is much narrower than that of the continuing “youth level 3 entitlement” and that it also excludes qualifications in key sectors, such as hospitality.  Reforms to address this inequitable situation and also to establish an “adult level 2 entitlement” would greatly help young people aged 23+ who failed to achieve such qualifications at school and college in the past and wish to return to education.

We believe that the lifelong loan entitlement proposal does have some possible merits, including that it could support access to funding on a more flexible and modular basis and develop greater parity between our FE and HE systems. However there are concerns that it may lead to excessively high levels of student debt, currently affecting university students, becoming a reality for people using this loan to fund sub-degree technical qualifications (Level 4 and 5) in the future. One means of partly tackling this would be for government to take forward the recommendation by the Augar Review for the restoration and extension of maintenance grants of up to at least £3,000 per annum to support the large number of “socio-economically disadvantaged students.” Another key barrier highlighted by Augar that remains unresolved is the equivalent or lower qualification (ELQ) funding rules which bar access to state funding for many people wishing to pursue qualifications at a lower level than their highest held qualification.

Primary and secondary education

5. Does the national curriculum equip young people with the right knowledge and skills to find secure jobs and careers? What changes may be needed to ensure this is the case in future?

The main point that we wish to address is the need for a national curriculum that supports all our young people to fulfil their potential. The TUC welcomes the broad thrust of government policy to develop the type of post-16 education and training framework seen in other countries where there are high status routes to apprenticeships, higher technical education and higher education. However, as we highlight in other parts of this submission it is crucial that government ensures that the apprenticeship and technical education routes are of a consistently high quality, are invested in for the long-term, and are accessible to all. This remains a key challenge for apprenticeships and government should ensure that the continuing high incidence of poor-quality provision and is not repeated with the roll-out of T levels and the development of new higher-level technical qualifications at levels 4 and 5.

There is much to learn from other countries with well-respected post-16 education and training frameworks that the government has explicitly pointed to as examples of what current reforms are aimed at developing. In the foreword to the Post-16 Skills Plan[38] which set out plans for new technical qualifications such as T Levels, the Skills Minister at the time, said: “Years ago, our international competitors realised what it takes to ensure there is access to high-quality technical education – and have moved even further ahead of us as a result.” According to reports at the time the government particularly drew on the apprenticeship and technical education systems in countries such as Germany and Norway.

A key finding from many of these countries is that public spending on technical education routes is much higher than the equivalent spending on our vocational routes and that this spending does not fluctuate over the political cycle. Another key difference is that these countries tend to manage their apprenticeship and skills systems under a social partnership arrangement and this engenders a joint commitment among employers and unions to provide large numbers of high-quality apprenticeships and work experience placements.

6. Is careers education preparing young people with the knowledge to explore the range of opportunities available? What role does work experience play in this regard?

Young people already face an uncertain future, which has been worsened during the pandemic. For young people coming out of work during the crisis, or those newly-entering the labour market, plans for the future will require support.

Over the years, funding for professional, independent careers advice for young people has been cut. Much of the support available is via the charitable and voluntary sector and the National Careers Service is less known and accessible for young people in and out of work to get support. Job Centre Plus programmes such as the Youth Obligation Scheme have failed to meet the needs of young people seeking work.[39]

In research conducted with young workers, they told us they want to do well and get ahead at work. They feel that if they’re at school, college or university they can access a careers service. If they’re unemployed they can access the job centre. But when they’re in employment they feel completely unsupported – often employers are unable or unwilling to offer training and progression opportunities.[40]

The government should invest in dedicated careers advice services, accessible to all young people. This would allow for[41]:

• Careers advice linked to local labour market needs or where there are skills shortages
• Support for young people accessing training and skills needed to progress careers or transition to new opportunities as part of a move towards net-zero and jobs of the future
• Help young people better understand the opportunities available to them, increasing awareness of apprenticeships, further and higher education or other job opportunities and support in accessing the training needed.
• These services should recognise the different needs of young workers and how their individual circumstances can affect the level of support needed, i.e young women, BME or care-leavers.

7. What lessons can be learned from alternative models of education and assessment? What are the challenges with, and obstacles to, the adoption of such models?

Further education, higher education and training 

8. What more needs to be done to ensure parity of esteem between vocational and academic study in the jobs market and society? How can funding play a role in this?

9. What is the role of business and universities in creating a thriving jobs market for young people? How should they be involved in developing skills and training programmes at further and higher education level?

A higher level of ambition for learning and skills

The TUC welcomed a number of the recommendations of the Augar Review, in particular those aimed at improving the funding of, and access to, post-school vocational pathways leading to high-quality apprenticeships and higher-level technical qualifications. In essence many of these recommendations were designed to address the parity of esteem between vocational and academic study in the jobs market and society.

Earlier in this submission we identified that the government’s latest funding decisions for FE and skills and its current policy stance on adult level 2 and 3 entitlements are not living up to the scale of reform that the Augar Review called for.

The impact of the pandemic also means that we are now facing huge economic and social challenges compared to the socio-economic environment when the review reported two years ago. These new challenges require a response by government well beyond the original recommendations of the review rather than a watering down of the review’s vision.

We need a much more extensive range of post-school education and training entitlements and the necessary scale of funding to guarantee all young people access to high quality FE, HE and training opportunities. The response by the government set out in the white paper is too limited and delaying long-term funding decisions on FE & skills and the government’s final response to the Augar Review is untenable in the current economic crisis.

The TUC has called for a massive retraining programme to tackle the crisis in our jobs market which is particularly impacting on young people.

This would involve introducing a new right to retrain for everybody, backed up by personal lifelong learning accounts and a significant increase to the government’s adult skills budget. 

To make this work there would need to be a range of related policy reforms, including:

• a new right to paid time off for education and training for workers;
• a new entitlement to a mid-life skills/career review;
• and, development of an all-age careers guidance service.

In addition, the government needs to review the puzzling decision by the Department for Education to cut the grant for the Union Learning Fund, which has been proven to be hugely effective in helping working people into job-relevant skills and training.[42] 

On the issue of parity of esteem, it is important to point out the inequitable treatment of staff working in colleges compared to other parts of the education sector.

There is a whole chapter in the FE and skills white paper on supporting the development of the FE workforce, which is welcome.

However, it is surprisingly that there is little or no reference to some of the key recommendations by the Independent Commission on the College of the Future[43] led by the Association of Colleges, which reported last autumn.

For example, the commission’s recommendations for FE in England included: a new starting salary of £30,000 for teaching staff in colleges to tackle the pay gap with schools; and, a national social partnership between government, the Association for Colleges and trade unions to look at long-term strategic workforce challenges.

Neither of these key recommendations are referred to in the white paper and the absence of any policy proposals on the FE pay gap and other key workforce challenges in the sector holds out little prospect of significant reforms on this front.

10. What can be done to ensure that enough apprenticeship and traineeship placements are available for young people? Is the apprenticeship levy the right way to achieve a continuing supply of opportunities?

As we highlighted earlier in our response, increasing equitable access to high-quality apprenticeships should be a priority to support the economic recovery and the job prospects of young people, especially as the pandemic has reduced the number of young people able to pursue this route. 

Compared with many other countries, the apprenticeship route has been taken up by a much lower proportion of our young people in recent decades and this is in part due to the existence of a different “training culture”. In many other European countries it is the norm for employers to grow their businesses by recruiting and training apprentices and this ethos is fortified by a “social partnership” approach on apprenticeships and skills. This involves employers, unions, government and other stakeholders collaborating to agree training standards and other key aspects of the apprenticeship programme.

According to reports by the OECD and other organisations, the UK (and in particular England) lack the national social partnership arrangements that underpin high-quality apprenticeship and skill systems in many other countries.[44] The TUC is currently calling on the government to establish a National Skills Taskforce to give a new impetus to a collaborative strategic approach along these lines.

Reform of the levy

In recent years the TUC has been calling for a range of reforms to the levy to boost the number of high-quality apprenticeships, including flexibilities to allow employers to be able to use their levy funding for:

• innovative pre-apprenticeship programmes to support transition to a full apprenticeship
• internal capacity building (e.g. new apprenticeship training centres)
• initiatives aimed at widening access to apprenticeships by under-represented groups (e.g. local outreach programmes)
• additional learning and training support for English, maths and digital skills components of an apprenticeship.

The TUC also continues to call on government to extend use of procurement and contracting for infrastructure projects and other public spending initiatives to boost investment by obliging employers to recruit a certain number of apprentices depending on the value of the contract in question. The TUC and affiliated unions have influenced this agenda by negotiating joint agreements with major employers (e.g. the TUC HS2 framework agreement[45]).

Too many poor-quality apprenticeships

The continuing high incidence of poor-quality apprenticeships is another major challenge that needs to be tackled. Trade unions have a long tradition of supporting apprentices and it is no coincidence that many of the programmes where demand is greatest are those where unions have negotiated a high-quality apprenticeship offer that is open to all. Unfortunately this is too often not the case in many other circumstances. It is notable that the last major report on apprenticeships by the parliamentary Education Select Committee concluded: “Too many apprentices are simply not getting the high-quality training they deserve and too many people, particularly the young and disadvantaged, are not being given the support they need to pursue an apprenticeship and get on in life”.[46]

These central failings were also highlighted in a subsequent report by the All-Party Parliamentary Group on Apprenticeships.[47] A very recent speech[48] by the Head of Ofsted, Amanda Spielman, demonstrates the continuing slow progress in tackling this. She said that a third of the latest Ofsted visits to apprenticeship providers highlighted concerns with quality, concluding: “To have such a high proportion of insufficient progress judgments is troubling. The quality of apprenticeship training does need to improve.”

Apprenticeship training

The TUC has supported reforms by government aimed at improving quality, including the regulation specifying that a minimum of 20% of apprentices’ working time should be dedicated to off-the-job training.

Despite this, the latest government survey[49] shows that 70% of apprentices are still not receiving formal off-the-job training in line with this regulatory minimum. Limited access to formal training may be one factor explaining the shocking finding from this survey that nearly a quarter (24%) of apprentices say that they are completely unaware that they are undertaking an apprenticeship.

Too many employers are also restricting apprentices to a level 2 apprenticeship even though they are more than capable of achieving at level 3 and above. There is now an entitlement in place for all young people and adults to pursue a fully funded first level 3 qualification at school or college, but this is not reflected in our apprenticeship programme.

To address this the TUC is calling on the government to introduce a new “right to progress” for apprentices who have completed a level 2 apprenticeship: this would entitle them to progress to achieve a level 3 apprenticeship with the employer in question.

Low pay and income

In line with the picture on training, there continue to be concerns that too many apprentices are being exploited by employers and paid poverty wages. This is hardly surprising considering the findings from the government’s biennial apprenticeship pay survey and related research by the Low Pay Commission (LPC)[50] showing widespread contravention of the National Minimum Wage (NMW).

Some of the key findings from these latest surveys are that:

• 19% of apprentices are not getting paid the NMW wage rate that they are entitled to
• 27% of those on the apprentice NMW rate are underpaid
• apprentices as a whole are around ten times more likely to be underpaid than the average worker due to widespread contravention of the minimum wage.

Poverty and low income for too many apprentices is reinforced by their limited access to student discounts for many day-to-day expenses. For example, the TUC has produced analysis[51] showing that apprentices in many parts of the country are unfairly denied public transport travel discounts that are made available to all students.

This report called on the government to deliver on a commitment it gave in 2017 to introduce a national travel discount for all apprentices. Research has also shown that 40% of apprentices are spending more money on undertaking an apprenticeship programme - including outlays for extras such as work clothes, travel and childcare - than they get paid for their apprenticeship.[52]

Equality and diversity

Wide-ranging research shows that under-represented groups, including BME, women, disabled and LGBT+ apprentices - continue to face major barriers when it comes to accessing the best apprenticeships.

In some cases it is not so much the numbers of individuals accessing apprenticeships from these groups that is the central issue. For example, while women are just as likely to take up an apprenticeship, a wide range of research shows that they are much more likely to be working in sectors synonymous with low pay and do not have as much opportunity to access apprenticeships in sectors[53] which would lead to increased career opportunities and higher pay. This is a major contributor to the gender pay gap.

For example, one analysis[54] shows that the UK has “the lowest proportion of female professional engineers of any European country [and] the lack of diversity in UK engineering .… is also reflected in the low intake of people from black, Asian and minority ethnic backgrounds.”

For BME groups there is a double whammy as research also shows that in addition to occupational segregation and low pay, they are much less likely to access any kind of apprenticeship. A study by EHRC[55] highlights research showing that in one year 38% of the applicants for apprentices were from BME groups but they made up just 17% of apprentices taken on in that year. These twin barriers also reflect the experiences of many disabled people who engage with the apprenticeship programme.

To tackle all of the above challenges the TUC has called for a range of policy measures to: strengthen enforcement of employment and training rights of apprentices; boost wage levels; improve equality of access; and, guarantee a minimum progression to a level 3 apprenticeship.

The government should also draw on the experience of many other European countries that engage directly with employers and unions to ensure a strategic overview of their apprenticeship programmes.

Jobs and employment

11.What lessons can be learned by current and previous youth labour market policy interventions and educational approaches, both in the UK and in other countries?

In May 2020, recognising the economic impact of the Covid-19 pandemic, the TUC called for a jobs guarantee[56].

In our report, we said that such a scheme should:

• provide funding to offer a minimum six months job with accredited training, paid at least the real living wage, or the union negotiated rate for the job.
• offer a job to as many people as possible who face long term unemployment but prioritise every worker aged 25 and under who has been unemployed for three or more months and workers aged over 25 who have been unemployed for six months or more
• be funded by national government, but delivered at regional and local level, with inputs from local leaders, unions and business, working alongside Jobcentre Plus. This would be delivered by regional Reconstruction and Recovery panels, set up to deliver guaranteed jobs in the local area that:

• are additional
• provide a community, public benefit and/or help to decarbonise the economy
• meet local labour market needs and
• promote and protect equality.

The government has since launched the Kickstart scheme, with £2 billion to create opportunities for 16-24 year olds who are claiming Universal Credit and at risk of long term unemployment. Young workers employed on the scheme will be paid at national minimum wages rates according to age and for 25 hours per week. The scheme is currently due to run until December 2021[57].

Since its launch in summer 2020, take up has been slow. Changes have been made to address this. The requirement for employers wanting to create less than 30 opportunities to use a gateway has been scrapped[58] allowing smaller businesses to participate. However, whilst the scheme has reported 195,000 job opportunities as approved, just 16,500 young people had started jobs created by the scheme as of 28th April 2021[59]. In the North East, this was as low as 490 at the beginning of April. The Department for Work and Pensions have not been able to provide a geographical breakdown of approved job opportunities, or data on the demographics of those young people who started opportunities. We are concerned that that regional inequalities and barriers to participation for underrepresented groups are not recognised or being addressed.

When the scheme was launched, the TUC launched a guide for union workplace reps to help make these good-quality opportunities[60]. This set out what action is needed to make the most from the Kickstart scheme , including:

• Good quality jobs with training built in – so there must be a guarantee that young people get access to real training – and strict checks to ensure employers are offering it.
• Additional jobs of real value to the community - there needs to be strict vetting of the new job placements, to make sure these are additional jobs.
• The programme must be based on equality from the start - the programme must be designed to actively work against any discrimination – with regular monitoring to make sure that everyone gets fair treatment.
• Employers should top up wages - the government is funding minimum wage jobs. But employers should do the decent thing and top up pay to a real living wage.

Creating job opportunities is a good first step but we need to ensure the above are done otherwise the scheme will not deliver as needed. The government can go further to make sure it can prevent the scarring impact of unemployment on young people and should:

• Extend the scheme past the current December 2021 end date
• Widen eligibility to include those outside of the current age requirements and those who are newly unemployed or at risk of redundancy
• Ensure that the scheme is delivering for those who are disproportionately affected by unemployment as a result of the pandemic including BME and women workers
• Create regional recovery panels, working with trade unions, business and other local leaders to ensure good quality job opportunities are being created and taken up.

There is precedent for a social partnership approach to interventions like this, with widened access to young people unemployed or at risk of unemployment.

The Future Jobs Fund (FJF), launched in 2009 after global financial crisis, was delivered by DWP with local and regional partnerships involved in creating jobs. Our regional TUC’s, alongside regional government offices, LEP’s and devolved administrations worked together on this. FJF was originally launched to run between 2009 and 2011, but was extended by an additional year into 2012, allowing for more opportunities.[61]

Two years after starting the programme, participants were less likely to be in receipt of welfare support by 7 percentage points (or 16 per cent less likely) and more likely to be in unsubsidised employment by 11 percentage points (or 27 per cent more likely) per participant than they would have been had they not participated.[62]

Across Europe, the EU Youth Guarantee (YG) was launched in 2013 to guarantee a young person a good quality offer of a job, education or traineeship within four months of being unemployed. Youth unemployment was as high as 24% at its launch but had fallen to 14% by 2019. Improved economic conditions and the YG take credit, with more than 3.5million young people accepting an opportunity on the scheme.[63]

The scheme was targeted at those aged under 25, but some countries raised the age to 27 and 30, reflecting the need to adapt to national regional and local circumstances. The scheme was also based on a social partnership approach, with continuous assessment to ensure improvement. 

The OECD said that emerging lessons from the local implementation of youth guarantees highlighted the importance of giving local areas the flexibility to tailor the scheme, as well as the need for strong partnerships to ensure successful implementation. In particular, it recommended developing better relationships with trade unions and youth organisations.[64]

12. What economic sectors present opportunities for sustainable, quality jobs for young people? How can we ensure these opportunities are capitalised on and that skills meet demand, particularly for green jobs?

Creating good quality jobs across the economy will provide opportunities for young people. Research carried out for the TUC by Transition Economics reveals that fast-tracking spending on projects such as broadband, green technology, transport and housing could deliver a 1.24 million jobs boost by 2022.[65]

Ranking a range of projects by their ability to create jobs quickly, help the transition to net-zero, and improve skills and productivity across the UK, they show that projects with high job creating potential in the next two years include:

• investment in high-speed broadband, which could help create over 40,000 new jobs
• research and development in de-carbonising technology in manufacturing, including carbon capture and storage, which could help create over 38,000 new jobs
• expanding and upgrading the rail network, which would help deliver over 120,000 new jobs
• investing in the electrification of transport, including electric buses, new electric ferries, battery factories, and electric charging points, which could help deliver 59,000 jobs
• building new social housing and retrofitting existing social housing, which could deliver a 500,000 jobs boost.

The government can ensure that this spending is supporting jobs across the board by:

• Establishing a new Just Transition Commission to oversee the transition to net-zero in a way that supports jobs and workers across the UK. This should bring together workers through their unions, business, and government, including regional and local government, to set out a clear plan for meeting the net-zero target.
• Using procurement to support UK jobs by working strategically with commissioners and both current and potential providers (i) to map goods and service requirements and identify procurement opportunities in advance (ii) build capacity to bid and deliver through the supply chain and (iii) use intelligent, social value procurement to secure good quality jobs and the creation of opportunities for young workers including good quality apprenticeships.
• Setting out an Olympics-style plan to promote good quality jobs and training on every new infrastructure project, and specifying how these projects will with creating job opportunities for young people through an improved Kickstart scheme: When the Olympics were planned, government and the Olympics Delivery Authority worked with trade unions, local authorities and others on an agreement that ensured that the project would deliver good quality local jobs and skills programmes. A similar agreement was reached to deliver HS2. We now need similar framework agreements, which set out how contractors will work with trade unions to deliver local jobs and apprenticeships, for every infrastructure project backed by government investment. These agreements also need to set out a commitment to tackling labour market inequalities and ensuring equal access to work for those with protected characteristics. Government should require investment in infrastructure projects to come with a commitment from contractors to help deliver opportunities in the Kickstart scheme.

Alongside this job creation, a public sector jobs drive alongside this will create decent, higher skilled and better paid work, and can help tackle the persistent race, class, gender, disability, regional and wider inequalities the UK has faced for decades.[66]

We are calling for government to invest in 600,000 jobs in public services, including

• 135,000 in health
• 220,000 in adult social care
• 110,000 in local government
• 80,000 in education.
• 50,000 in civil service / public administration

Overall, the TUC’s plan for jobs would deliver 1.85 million new jobs in the next two years.

13. How might future youth labour market interventions best be targeted towards particular groups, sectors or regions? Which ones should be targeted?

As we’ve set out, there are many challenges facing young people in employment as well as those seeking work. It’s clear that more needs to be done to support young people to find and sustain good-quality work that allows them to get on.

However what is clear is that not everyone starts on a level playing field, and challenges differ for young people based on where they work, where they live or more worryingly, their gender, race, class and disability.

Adopting some of the changes we have called for above would help tackle these inequalities, and deliver on the government’s levelling up agenda. To start with, current and future interventions, such as Kickstart and other job creation schemes, should be delivered locally and regionally, with recovery panels that we have called for.[67]

Such interventions would allow for targeted appropriate support to help young people. They could ensure that job creation is focused on emerging industries and opportunities available locally, joining together young people with the jobs of the future, and the skills needed to access these.

It is important that interventions are focused on not just young people but those who are disproportionately impacted by job losses during the pandemic including young BME people and women. The Public Sector Equality Duty (PSED) requires government to consider the impact of its policy and decision-making from the start of policy development. Complying with this legal obligation would ensure government understand how planned interventions impact different groups and what approaches would best eliminate discrimination and promote equality. The EHRC has drawn up clear guidance[68] regarding steps that need to be taken to support compliance. These are usefully augmented by the recommendations EHRC has made on the two occasions it has used its enforcement powers to address Government non-compliance with its PSED[69]. One important point highlighted by the regulatory body is the need to assess the cumulative impact of policies as well as the specific impact of an individual policy.

To date, the government have failed to publish its Equality Impact Assessment on Kickstart. The TUC alongside others including Amnesty UK and Save the Children have jointly called for an inquiry into the government’s failure to comply with the PSED when it comes to decision-making during the pandemic and its impact on women.[70]

The Equality Act 2010 set out a socio-economic duty on public bodies. This was aimed at ensuring that all government departments and key public bodies placed tackling inequality at the heart of their decision making and that the “persistent inequality of social class, your family background or where you were born” was addressed in a systematic way.

However, this part of the Equality Act has not been enacted by successive UK governments.

The power of a positive duty on public bodies is important in that organisations are required to justify and explain their decisions openly. The duty would not only promote the transparency and accountability of decision-makers but would mean that failure to deliver against the duty could result in legal challenge.

Recently there has been progress in this area, with the Scottish Government enacting the socio economic duty through  the introduction of its Fairer Scotland Duty  April 2018. The Welsh Government has also announced its intention to introduce the duty soon.  A range of public bodies in England, mainly local authorities, have worked to incorporate the socio-economic duty into their approach to developing policy. Most notable among these is Newcastle City Council who have developed strategic policy as if the socio-economic duty was in force.

The Social Mobility Commission has called for the enactment of the socio-economic duty, a call that has been echoed by the Equality and Human Rights Commission the UN Committee on Economic, Social and Cultural Rights and a range of civil society organisations.[71]

Over a decade on from the Equality Act, the TUC has called on the government to comply with its duties under the Act and implement it in full[72]. This includes:

• Publish Equality Impact Assessments for all policies and decision-making, as it is legally required to do
• Bring the socio-economic duty into force.

Scottish and Welsh governments have adopted the socio-economic duty, and local authorities including Newcastle use it. Doing this would assist in the government’s commitment to levelling up and help to tackle the inequalities that disproportionately affect some groups.

As we begin with moving towards net-zero and other economic, technological and social changes take effect, it is important to ensure that interventions are focused on helping people into these jobs. Government needs to ensure that it supports young people already working sectors that will experience the greatest change into these new jobs and industries. Investment in jobs, skills and training, as well as the careers advice and support they need to access these, is key to ensuring transitions are fair and just.

New ways of working, including increased remote working, should be an opportunity to open up roles that were tied to inaccessible locations. For example a young working-class person wanting to access job opportunities in London would face financial barriers to doing so, given the cost of living.

Taking positive action should also be used to address under representation. The EHRC report on under-representation in apprenticeships[73] shows that “Women are well represented in apprenticeships across England, Scotland and Wales, but are under-represented in better paid industries and over-represented in poorer paid industries (a contributing factor to the gender pay gap).

For example, figures for construction, planning and the built environment show a stark disparity. In England, women made up only 5% of starts in 2017/18. In Scotland, men made up 99% of starts in the ‘construction and related’ grouping in 2017/18. In Wales, although women made up 60% of apprenticeships in 2017/18, they made up only 4% of those on construction programmes and 8% of those on engineering programmes.

In contrast, women are over-represented in apprenticeships in poorly paid sectors, such as hairdressing and early years care. For example, women made up 94% of all apprenticeship starts in child development and wellbeing in England in 2017/18”. One in eight childcare workers, a workforce primarily comprised of young women workers, are paid less than £5 per hour.[74]

It points to action that can be taken, and has been, that tackles this. One method is to allow flexible working in apprenticeships, which is particularly important for young women with caring responsibilities as highlighted in the Young Women’s Trust report[75].

Supporting employers to tackle inequalities in access to apprenticeships, by ensuring young women take up jobs in sectors they are under-represented in and offering part-time apprentice opportunities would go some way to tackling the gender, race and disability divide on pay and access to these opportunities.

10th May 2021