Unemployment in Britain

A good job is hard to find for Britain's young unemployed

Economic and Social Research Council report shows how tough life has become for young people trying to enter workforce

     There are more than a million people under 25 who are unemployed in the UK, according to the internationally agreed measure of unemployment. Graduates are leaving university and finding that the only jobs they can find are in supermarkets or cafes.

      It has been clear for some time that the recession of the past five years has had a disproportionate effect on the young, but a report by the Economic and Social Research Council shows just how tough life has become.

      When the economy was growing strongly before the slump, 50% of young people out of work in 2006 had found a job by 2007. Three years later, that percentage had almost halved; only 27% of those young and unemployed in 2009 were in work a year later.

      By contrast, employment rates for so-called prime-aged workers, those aged between 25 and 44, barely budged. The proportion of this group entering the workforce between 2009 and 2010 fell by just three percentage points compared to 2006-07, while labour participation of those aged over 44 actually rose.

      Young people were not just less likely to be taken on by an employer, they were also more prone to being laid off than older workers.

     The study raises some important issues, both social and economic. Previous research has shown that someone who is unemployed when they are young is more likely to be out of work in later life, and suffer a higher risk of low income and poverty as a result. This is what lies behind the talk of a "lost generation".

     What appears to have happened over the past five years is that employers have hoarded labour and put a higher premium on experience. They have been wary of hiring young people who by virtue of their inexperience are not as productive as a fully-trained older worker, and when times have been tough the axe has fallen on the new recruits.

     Tackling the problem of youth unemployment has, rightly, become an urgent priority for the government, although it is worth mentioning that one of the first things it did was to scrap Labour's Future Jobs Fund, a scheme that was having some success in getting young people into work.

     A number of possible remedies have been mooted. For those who believe that young people are pricing themselves out of the labour market, the solution is to make the minimum wage less generous. Given that the rate for 18 to 20-year-olds is less than a fiver an hour, and for 16 to 18-year-olds is £3.68 an hour, it is hard to say that the minimum wage is unduly generous, particularly given rising transport costs for those travelling to work.

     Germany's highly advanced system of apprenticeships is also much admired by some UK politicians, and there is no doubt that the withering away of extensive on-the-job training has played a part in making the transition from education to work far more difficult for young people in Britain.

    Ultimately, though, the problem boils down to this. Demand for labour is weak, and cost-conscious employers are not inclined to hire young workers. Government policy should have three aims: an education system that prepares people for work, a macroeconomic policy that generates sufficient demand and a system of financial incentives to persuade employers to give school leavers and graduates a break.