LIVERPOOL CITY REGION COMBINED AUTHORITY– WRITTEN EVIDENCE (YUN0064)

Youth Unemployment Committee inquiry

Introduction

Liverpool City Region Combined Authority is comprised of the Local Authorities of Halton, Knowsley, Liverpo­­ol, Sefton, St Helens and Wirral. Established in 2014, it has a £32bn economy, serving 1.6m people: of these, 976,500 are of working age (16-64 years). Currently there are 638,300 jobs and 78,200 self-employed people.[1]

As a proportion of the total population, Liverpool City Region has a similar sized working age population as the rest of the country. Many of these working age residents tend to be younger. 20-34-year olds make up 21% of the LCR population compared to 20% nationally, while 35 to 49 year olds make up 18% compared to 19%. This is likely driven by the large student population in Liverpool. Many of these students remain in the City Region after graduating and join the labour force.

Prior to COVID-19, considerable progress had been made in reducing the level of unemployment, including that affecting young people. Overall unemployment has fallen significantly from 6.2% in 2004, to 3.4% in late 2020, lower than both that of the North West and the UK.

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Unemployment and economic inactivity rates for particular groups (e.g. those with disabilities and or a learning difficulty aged 16-24) are still higher than the overall total unemployment and activity rates. Too many people of working age continue to be not in employment, and more than a quarter of people still do not participate in the labour force as result of long-term sickness. Health remains a significant barrier to work and a barrier to increasing overall productivity.

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A skilled, motivated, and healthy workforce is a key component of an economically successful, healthy and vibrant economy and City Region. Economically active and motivated young people play a crucial part in enabling businesses to access a diverse workforce to meet their current business needs and importantly are the workforce and talent pipeline of the future. 

Even when economic conditions are more favourable, reflected by both the volume and breadth of employment opportunities available for those seeking work, some young people have traditionally and consistently faced disadvantages in the labour market.

Economic shocks and periods of economic stagnation provide further challenges for young people seeking to enter the labour market. Whilst such economic shocks do not by themselves cause high levels of so-called NEET and youth unemployment, they do make things worse affecting young people and young adults disproportionately compared to other groups of working age.

A number of welcome initiatives and support packages have been introduced, and which are outlined in this briefing. It is essential that we use local knowledge and existing stakeholder and business relationships to ensure that these are introduced, managed and delivered successfully.  Adopting such an approach will help to ensure that appropriate support reaches those young people most in need of support helping their transition to further learning and employment.

Scale of Unemployment

The scale of the impact on young people is illustrated by the increase in the number of people nationally aged 18-24 claiming unemployment related benefits which rose by 125% between March and December 2020.  The latest data, from December 2020, showed 10.1% (9,900) young people aged 16-24 across the Liverpool City Region were classed as unemployed: this compares to the North West rate of 12% and the national rate of 13.7%.

Labour market statistics from ONS suggest that the coronavirus pandemic continues to have an adverse impact on the labour market for young people with an increase in unemployment and a large fall in employment over the last quarter. Recent research by the National Youth Employment Group (membership includes LCRCA), together with Labour Market updates provided by the Institute for Employment Studies[4] (based on analysis of Government statistics) indicates that:

• More than one-in-three young people aged 18-24 are earning less than before the outbreak;
• Around 30% of workers under the age of 25 were employed in sectors severely affected by the government’s lockdown measures[5].
• Around a quarter of them have been furloughed [Prior to Roadmap Stage 2]
• One-in-seven young people at the height of the pandemic were claiming unemployment benefits;
• Young people account for 46% of the overall fall in employment;
• Young people are bearing the brunt of lockdown – 47% of people furloughed aged under 24;
• The fall in employment is four times higher for young Black people and nearly three times higher for young Asian people 
• Almost 200,000 young people who are out of work have been unemployed for over six months;
• The impact of the lockdown (influenced by the social and business restrictions attached to it) cannot easily be seen in the actual headline employment figures; impact is instead more visible in the hours worked: Youth PAYE employment has now fallen by 12.0% since the start of the crisis, while the fall for other age groups has been just 1.4%. [6]

Those young people (from aged 16) currently undertaking an apprenticeship have also been affected; research by the Sutton Trust in May 2020 indicated that nationally 61% of apprentices had either been furloughed, had their off- the- job training suspended or been made redundant.  Whilst precise evidence still remains patchy, it is likely that the situation will have worsened further since this research was undertaken. Apprenticeship delivery and access to opportunities remain challenging: many existing learners are now ‘out of funding’ yet still lack core elements of their programme and the acquisition of knowledge required for the job role; many learners have not completed their End Point Assessments (at the same time that unspent funds in an employer Digital Skills Account have returned to Treasury as they have passed the 24 month threshold).

As indicated earlier, although national unemployment figures remain relatively stable, there are still (Pre-April Reopening) over 5,000,000 workers across the country on furlough. The worrying trend for young people is that whilst PAYE Payroll data employment is down on average 1.4% across the UK vs Pre-Pandemic, it is down on average 12% for those aged 16-24.

Nationwide we are seeing more significant long-term youth unemployment increases and a huge drop in the number of self-employed individuals, falling to its lowest point since late 2009.

In March 2020 there were 1,940 16 and 17-year-old so-called NEETs or Not Knowns in LCR. This is down from 260, from the previous figure of 2,200 in March 2019, and represents a continued annual fall every year over the last five years, dropping a total 42.5% since 2015.

On Average, 81% of those known are in Full Time Education & Training. This is below the 85.4% figure for England and the 83% figure for the North West.

Vacancies

At the start of March 2020 (W/E 15th), before the main elements of the first national lockdown were announced, advertised vacancies in LCR were running at an average of 12,000 a month.

Over the period March – June 2020, we utilised Institute for Employment Studies and Adzuna data to track the change in vacancies over the lockdown period.

The average low point during May 2020 was around 5,500 vacancies, representing a 54% decline with pre-lockdown figures. As of May 10th 2021, vacancies in LCR stood at 12,400 – a 3% increase since pre-pandemic.

The ONS stated in April 2021 that Job Vacancies nationally were still down 22.7%.

Challenges

The impact of the last 12 months has left many young people facing several barriers to employment, with those aged 16-24 over 2.5 times more likely to have been working in sectors hit hardest by the COVID-19 pandemic.

Young people are particularly susceptible to unemployment caused by economic and sectoral contraction and the collapse of aggregate demand, alongside rising economic inactivity among their age group. This is because many sectors, such as manufacturing, which are often reliant on the influx of new, younger workers, are typically the first to be ‘let go’ when a sector contracts as a result of existing market regulations.[7] This is further supported by ONS analysis[8] that the largest age group for ‘zero hour contracts’ is amongst 16-24 year olds, which , when recession hits, can leave individuals with no work and no associated employment protections.

Many young people who expect to leave their compulsory or tertiary level of education during a recession tend to face a prolonged spell of unemployment once they leave the education system, as a result of withdrawn labour market recruitment and a lack of experience and human capital.[9]

Graduating from university during a recession has a large and persistent effect on wages throughout an individual’s career, causing them to have substantially lower lifetime earnings than those entering the labour market at more favourable times. The subsequent effect, however, of having a tertiary-level education or wider professional skillset means that less skilled labour is taken by those with higher educational attainment, reducing the availability of lower-skilled jobs for other young people hoping to enter the market. This also tends to detrimentally effect younger individuals from ethnic minority backgrounds.

Young people entering the labour market during periods of economic growth tend to get promoted faster and reach higher levels of their career than those who are unfortunate enough to enter during a recession.[10] The subsequent effect of unemployment on a young person’s career could be restrictive in that some employers may consider any period of unemployment, regardless of wider economic factors, as a negative signal[11] preventing an offer of employment taking place.

Further analysis[12] suggests during periods of economic crisis when unemployment in the wider market remains high, families whose parents are from lower social economic backgrounds and may have fewer educational qualifications, tend to instil lower educational aspirations on their young children, than those in more highly educated and better-off households. This results in fewer disadvantaged young people wishing to attend university or other avenues of higher education, whilst wider attitudes to schooling and the importance of GCSEs is also negatively impacted during these periods.

Research suggests[13] that young people between the ages of 17-25 who become unemployed during a recession are more likely to be pessimistic about their future lives than those growing up in more favourable circumstances. The impact of mental and physical health on a young person during a period of unemployment can be harmful in their quest to obtain a job, preventing them from sustaining employment or even the basics of being able to attend a job interview if an individual has moved into the ‘economically inactive’ group as a result of underlying health conditions worsened or inflicted due to  a period of unemployment.[14]

Many young adults who suffer unemployment but who happen to still be living with their parents have the impact of this significantly cushioned[15] by their families’ resources, and as such those with higher incomes are able to ‘bounce back’ into the labour market much more quickly than those with little or no support.

This ‘scarring effect’ is more pronounced for some young people than for others: in areas where traditional unemployment is less common, the social norms, and influences,  associated with not growing up in areas of high deprivation and worklessness can act as a mental and social shield- due to the greater prevalence and the availability of employment support networks.[16] On the other hand, for other groups of young people it can also create an expectancy of future unemployment, particularly where youth unemployment has restricted the opportunities and social networks of individuals, limiting their scope of professional relations.

Current LCRCA Programmes

Young Person’s Guarantee

The Combined Authority will implement a Young Person’s Guarantee – the commitment of a job, training or an apprenticeship opportunity for every young person out of work for more than six months. We will start with a focus on all school leavers, with the ambition of rolling this out to everyone under 25.

Liverpool City Region in partnership with Department for Work & Pensions: ‘Youth Hubs’

The Combined Authority has been working with Department for Work & Pensions (DWP) to support the establishment of a Liverpool City Region Youth Task Force; its aim is to help support young people (principally targeting those aged 18-30) into employment. The Youth Task Force locally and wider partners has put in place both an on-line offer, accessible at https://youthhub.be-more.info/ , whilst also establishing a physical hub in each of our local authority areas to deliver face-to- face support to those who need and prefer this level of support.

The Taskforce was initially envisaged as a virtual forum for key partner organisations who support young people into work to come together and make a difference- sharing information around delivery and gaining commitment for them to deliver events and activities as part of our Youth Offer.

As the work to support young people has expanded, so has the scope and on-line service offer available via the website. Services now offered include:

• Continuously updated events and opportunities from stakeholders across LCR, with an interactive calendar to support attendance across web, tablet and mobile browsers;
• Provision of Physical Youth Hub Signposting, including event crossover and support opportunities;
• Bespoke written and video content providing young people with the essential support they need including CV writing, interview techniques, confidence building and addon support to complement co-located support from Work Coaches;
• Partnerships which embed live streamed events such as Virtual Jobs Fairs, which can be easily replicated and distributed via the website to all partnership youth hubs;
• Accessible careers materials from the CA and partner organisations, such as the Careers and Enterprise Company and Growth Platform;
• On-demand content requested by young people on bespoke issues; and
• Signposted support for those apprenticeships made redundant.

The face-to-face support is delivered in Hubs established in partnership with those organisations who have a tried and trusted record of engaging and working with young people. They are co-located in partners’ premises where many other valued services are already delivered for young people.

DWP Work Coaches are being be co-located in the Hubs, together with other youth focussed workers, to help provide appropriate learning and employment support to help young people to succeed in the labour market. The Department of Work and Pensions are supporting enhanced services to be made available for our young people needing extra support to enable their talents and skills to be applied in the workplace.

One of two national demonstrator Youth Hubs will be based at Merseyside Youth Association in Liverpool City Centre and the Hub is due to be fully operational from Mid-May 2021, with a range of other Youth Hubs providing support across the city also live to in-person engagement from this date.

Kickstart

The Kickstart Scheme is providing funding to create new jobs for 16 to 24-year-olds on Universal Credit who are at risk of long- term unemployment. Employers of all sizes can apply for funding.

The Combined Authority is seeking to ensure that Kickstart opportunities are made available and delivered for young people within a set of good practice principles that includes:

• Extending the Kickstart Scheme past its current end date of December 2021.
• Ensuring that the opportunities are clearly positioned to complement other existing opportunities for young people such as apprenticeships and Traineeships
• Working with local intermediaries / brokerage services to ensure that young people are offered choice and that they are able to access an opportunity that meets their needs and career goals;
• Working with local organisations and partners to ensure that Kickstart opportunities are visible and accessible.
• Ensuring clear progression and ‘next steps’ pathways- such as an apprenticeship; and
• Appropriate support prior to, during and after the work- placement opportunity.

The CA has previously written to colleagues at DWP asking them to have a look at widening the eligibility for Kickstart starts to allow 16-18 year- olds who are not in receipt of Universal Credit to apply.   As part of this submission, we flagged that the Minister for Employment committed to do this in a roundtable we held with her last Summer (the Metro Mayor was in attendance).

Where so-called NEET young people are engaged with/ known to our LA colleagues it makes sense to offer them the opportunities afforded through Kickstart as quickly as possible as we believe that it would contribute to preventing longer term unemployment amongst this cohort of young people;  there are increasing numbers of 18 year- olds in particular who would benefit from this sort of support. 

Redundancy Support for Apprentices

Liverpool City Region Combined Authority have been providing support for apprentices based in the City Region who have been made redundant as a result of COVID-19.

We have been proactively working with the Department for Education (DfE), The Growth Platform, the Apprenticeships Support Team at Halton Borough Council and other partners, including employers and local colleges, to help support redundant apprentices in finding a new suitable apprenticeship vacancy or alternatively a relevant college course.

Announced by the Metro Mayor in July 2020, the initiative is accessed through the City Region’s apprenticeship portal- ‘Be More’- and offers support to redundant apprentices to find a new suitable apprenticeship vacancy or explore college and other relevant learning options utilising local knowledge and existing relationships.

Careers Platforms

High-quality CEIAG can motivate individuals and help them in the creation of an inspiring vision for their future based on their skills, experience values, passions and motivation. Our goal is for all young people and adult learners locally to have access to up to date, high- quality CEIAG information that facilitates choice and ambition and promotes success across the LCR, and for them to be aware of the employment and career opportunities in our key sectors locally.

Our Employment and Skills Board (which also fulfils the role of our Skills Advisory Panel- SAP) has approved the recommendation for the development of a single and integrated Careers Education, Information Advice and Guidance CEIAG portal be developed and implemented across the Liverpool City Region.

The portal is being developed with a visible and local Unique Selling Point (USP), adding value to and not duplicating other services available locally, and putting equality and diversity at the heart of its development by ensuring that no user will be disadvantaged. This includes integrating and aligning, as appropriate, services provided through the local LCR Careers Hub (CEC funded and delivered by Growth Platform), our BE MORE https://be-more.info/ site that that focuses on Apprenticeships, and our new Youth Hub by BE MORE platform Youth Hub by Be More - (be-more.info) that provides an additional online and digital complementary offer to the face- to- face services provided. This work will address 3 core CEIAG objectives:

Objective One: To ensure better access to clearer and high-quality Careers materials and support, and up-to-date Labour Market Information, to better inform learning and employment opportunities- especially at key transition points;

Objective Two: Facilitate, support and strengthen employer engagement in CEIAG; and

Objective Three: Simplify Careers Education, Information Advice and Guidance.

3rd June 2021