Tackling high youth unemployment should be a key priority

By David Bailey on Apr 22, 12 11:56 AM in Economics

Unemployment declined by 35,000 in the three months to February to 2.65 million, the first fall since May 2011. While that's of course good news, the number of people claiming unemployment benefit is still rising, with the total number of people in receipt of jobseeker's allowance standing at 1.61 million in March.

Nevertheless, some analysts see the recent slight fall in unemployment as the first sign that the economy has returned to modest growth. Let's hope they are right.

Youth unemployment also declined slightly, by 9,000 in the three months to February, leaving 1.03 million 16 to 24 year-olds looking for work. The unemployment rate for this age group is still over one-in-five, the worst in 25 years, and what's especially concerning is that there was another increase in the number of young people who are long-term unemployed.

In fact, over the last year, the number of young people claiming jobseeker's allowance for 12 months or more has tripled.

In short, youth unemployment is unacceptably high. Of course, the biggest driver of the growth in long-term youth unemployment is a lack of demand in the economy and the fact that there aren't enough jobs.

But to be fair to the government, there was a problem in youth unemployment (albeit not nearly as bad as now) even before the banking system went belly up back in 2008. And it's young people with few or no qualifications in particular who can't find jobs.

The recent Commission on Youth Unemployment highlighted the "lack of vision for the 'forgotten half' of young people who are not destined for university or a high-quality apprenticeship post-16". In essence there is a failure of government policy for this 'forgotten half', most recently linked to some key policy errors like scrapping the Future Jobs Fund.

There are things that can be done. As I've said for ages, a targeted and temporary cut in employers' national insurance contributions for young workers could help boost the demand for labour, for example.

And as the Commission on Youth Unemployment has suggested, the government could do much more, such as 'frontloading' its youth contract initiative by doubling the number of job subsidies available in 2012, or by giving young people a guarantee of a part-time job if they have been on the government's Work Programme (which is meant to tackle long-term unemployment) for a year without finding a job.

Here in Birmingham I'd like to know what potential mayoral candidates would hope to do to bring down the unacceptably high rates of youth unemployment (and unemployment more generally) in the city.

And more generally, we really do need to challenge the view that it makes any sense at all to allow youth unemployment to remain so high. It doesn't, either for the young people unemployed, or for the wider economy and society.

Professor David Bailey works at Coventry University Business School.

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