Insights
Last week’s labour market statistics highlighted that young people are being particularly badly affected by the pandemic. The unemployment rate for 16-to-24-year-olds was 13.4% between May and July, with this having increased by 1.2 percentage points compared to the previous quarter, whilst the increases were much smaller for other age groups – between 0.0 and 0.2 percentage points. There were 156,000 fewer young people in employment in the three months to July than in the previous quarter, whilst the number of 25-to-64-year-olds in employment rose by 236,000 over the same period. Previous data revealed young people were more likely to have been furloughed than older workers.
Young people have been hard hit partly because they are more likely to be employed in those sectors – such as hospitality, tourism, arts and entertainment – that have been most affected by the pandemic. And those leaving school or university are less likely to get jobs given many firms will not be hiring. The expectation is that youth unemployment will continue to rise over coming months as the furlough scheme comes to end.
Aside from the immediate challenges of being unemployed at this time, the evidence shows that a period of unemployment when young, especially during a recession, can have long term effects. People who are unemployed at the start of their working lives are more likely to be unemployed later in life, earn less over their careers, have poorer health and report lower levels of life satisfaction. This is known as youth scarring.
This raises the question of what local policymakers can do to reduce the likelihood of scarring on the young people living in their area. Whilst the UK has never faced a scenario like COVID-19 before, we can draw lessons from what has worked in previous recessions. There is also evidence about what helps in tackling unemployment more generally. We summarise this evidence in COVID-19: Local responses to youth unemployment and scarring paper.
One of the most important findings is that being in subsidised employment can help reduce the time spent on benefits and increase the time in work over the medium- to long-term. Reflecting this, the government has announced the Kickstart Scheme to create six-month paid work placements for those aged 16 to 24. They have also announced additional grants for employers that take on apprenticeships.
One of the most important things a local area can do is to make sure these opportunities are being taken up by local employers and young people. This will be particularly important in areas with high youth unemployment. At the most basic level, raising awareness of available programmes and their benefits should increase take-up. Beyond this, local policymakers should consider whether they can offer support that would help employers to take part, for example, by providing assistance with recruitment or help in sourcing training for new recruits. Similarly, local areas should consider what additional support they could offer to young people taking part to ensure participation increases their chances of finding permanent employment.
An additional concern is that more young people may drop out from post-16 education this year – either because COVID-19 makes it difficult to sustain or because the uncertainty caused by the crisis resulted in them pursuing an option that isn’t right for them. Particularly worrying are reports last week that financial constraints on colleges are affecting the levels of student support they can provide. Local areas should consider how they can support young people who drop out to find alternative education, training or employment quickly.
Given their local knowledge and networks, local policymakers are also best placed to know what is needed in their local area, to ensure coordination and cooperation across different partners, and to plan for the longer-term.
COVID-19 is defining all our lives. By working to ensure that young people in their area do not experience long periods of unemployment as a result of the pandemic, local areas can help ensure that the long-term impacts on this group are minimised.
