Gurmaj Dhillon: We must not ignore the plight of young people in today’s labour market

Gurmaj Dhillon is an ex-Treasury official, and recently served as an advisor to the Conservatives on police reform and youth justice policy. He is currently on the Candidates' List.

Last week’s papers made grim reading on the unemployment front. The ONS reported that in the three months to May 2009, unemployment rose by 281,000 to 2.38 million and another 220,000 jobs were lost in the three months to June 2009. Add to this the probability that unemployment will continue to rise throughout the course of this year and next, reflecting its position as a ‘lagging indicator’ of economic recovery, and we can only too readily observe the ever-increasing toll of human misery behind the raw numbers.

However there is an even more unsettling edge to this terrible landscape, namely the impact of the current recession on employment prospects for the young. Of the recent trend in unemployment, the greatest rates of increase have been observed in the 16-24 age bracket. The ONS data indicates that 722,000 people aged 16 to 24 were out of work - one in six - while there are 206,000 people aged 16 to 18 out of work, one in three people within this age group.These raw figures are compounded by additional factors – for example, the scale of financial debt which weighs down on recent graduates and the difficult trade-offs parents will face between supporting their children and maintaining their own living in the current harsh employment landscape. Many commentators have already tagged the current 16-24 cohort as the ‘lost generation’, lamenting that even for those who find employment this will only consist of part-time or temporary work.

This situation adds to a wider sense that the young are being increasingly disenfranchised. Whether it’s an issue of securing material assets such as pensions, savings and property, or experiencing the social mobility which previous generations enjoyed, there is a sense that the ladder has been pulled up in the face of the younger population with few measures taken to help them recover their footing. This is not efficient from the perspective of national competitiveness, nor is it fair from the perspective of inter-generational equity.

What can be done to address this situation? A few months ago I attended a seminar held in the House of Commons, at which Prof. David Blanchflower (ex-member of the MPC) argued that there were a number of steps that could be taken to counter the impact of 600,000 + young people entering the labour market in summer 2009, such as increasing the number of higher-educational places and creating local public sector jobs targeted at the young. However, these potential remedies collide with current realities. Higher education institutions are being forced to cut forward student numbers, in anticipation of future spending cuts, and local government is already experiencing the financial squeeze that will shortly find its way upwards to central government.

The Conservatives must not leave this generation behind. Besides the national and individual costs in terms of welfare spending and self-worth, there are wider potential problems. For example, there is a significant overlap between the NEET population (Not in Education, Employment or Training) and the cohort at greatest risk of youth offending. The current faultlines in the youth labour market are unlikely to recover for the next few years, during which time fresh numbers of school-leavers and graduates will add to the scale of this imbalance. Young people will therefore struggle to get a foothold on the conventional career ladder, at least until the economic recovery moves into a more mature phase and employer confidence begins to strengthen.

So what can we do? The Conservatives have already outlined their plans for a ‘welfare-to-work’ programme, which will target groups under-represented in the labour market. On top of this, I think that we need to place more emphasis and support on helping young people to become entrepreneurs and start their own enterprises. This might mean providing support in the way of tax breaks or grants to those young people who choose to start their own business, at least as a way around the ‘experience gap’ that many encounter when submitting formal job applications. Another option might be to tweak the Conservatives proposal to subsidise employers who take on staff previously unemployed for more than six months, in favour of the younger population. This might cover the provision of work experience and internships, as well as permanent full-time jobs. In parallel, we need to ensure our educational institutions promote entrepreneurship among the young, in order to prepare them for the realities of the modern labour market. The work of organisations such as the Aldridge Foundation is ground-breaking in this respect.

These are off-the-cuff proposals – the point is that the Conservatives need to develop a real agenda here. What do ConservativeHome readers think? Do you have any practical ideas on how we might address the situation of youth unemployment?