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The coalition must rethink its approach to youth unemployment

Ministers must accept that the immigration cap will not help young Britons into work.

Today's rise in the number of young people not in employment, education or training is the biggest since records began in 2000. Compared with the same period last year, there are now 119,000 more 19-24 year olds not in education, work or training, representing a rise of 18 per cent. These figures follow new research published yesterday by the Chartered Institute for Personnel Development showing that while youth unemployment rises, employer demand for migrant workers continues to rise.

Both sets of figures should cause the government to rethink its approach. Tomorrow's migration statistics will confirm whether the trends are pushing the net migration target further out of reach: the previous quarter's figures showed emigration of British nationals down by more than 25 per cent since 2008, and immigration from Eastern Europe rising, both trends which the government can do little about. Last week, the Spectator magazine was one of the first to take the questionable argument that used to be levelled at Labour, that 'too many new jobs are going to foreigners', and turn it against the government. Yesterday's CIPD survey suggests that this pressure is likely to worsen, as employer demand for migrant workers continues to rise, particularly in the private sector, with 32 per cent now saying they are planning to recruit migrant workers in the next quarter:

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Source: CPID, August 2011

This national picture disguises significant regional variation. Employers in London (40 per cent) and the South (30 per cent) are significantly more likely to say they intend to recruit migrant workers than those in the North (14 per cent). There is also anecdotal evidence that the Government has underestimated the disruptive effect on employers of its 'cap' on non-EU migrant workers. In talking to business and other pro-migration audiences, ministers cite the fact that the interim quotas for 2010 were not fully taken up, to suggest that the cap has not been too restrictive. But at a recent meeting of the All Party Parliamentary Group on migration, employers and business associations confirmed that unused quotas reflected pre-emptive decisions by companies not bothering to go through the laborious process of applying, in the expectation that they would be disappointed. This new survey gives more detail on how these employers are reacting to the cap by switching to other kinds of migrant workers: more employers say they plan to hire EU migrant workers (34 per cent), than up-skill existing workers (23 per cent), or recruit more graduates. Eight per cent say they intend to offshore jobs abroad.

Why do so many employers still prefer to hire migrant workers? The CIPD survey casts doubt on the idea - a major theme in the reaction to Iain Duncan Smith's recent demand for employers to give priority to British workers - that it is all about 'soft skills'. The survey finds far more employers citing hard skills or specific experience - and interestingly, only 16 per cent saying they prefer migrants because they are cheaper:

Why do you prefer migrant workers? CPID, August 2011

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The overall picture is one of employers struggling to fill skills gaps despite rising levels of unemployment - suggesting that a renewed focus on training and skills would be more useful than attempting further restrictions on skilled non-EU immigration.

With today's NEET figures, last week's ONS labour market figures showing youth unemployment rising above 20 per cent, and the cuts in public sector employment starting to bite, the fall in the proportion of private sector employers planning to hire school-leavers must also be particularly worrying - though there is some encouraging news in rising awareness of apprenticeships.

In relation to immigration policy, the risk remains that a combination of trends beyond the government's control - British emigration, immigration from the EU, and employer preferences - will lead the government to adopt even more drastic measures on those limited areas of immigration it can control, like skilled workers from outside the EU, students, or settlement policy, simply because that is the only way to affect net migration numbers, even though the specific measures are likely to further hamper growth.

It is not too late for the government to break out of this dynamic, redouble its efforts on apprenticeships, and start the long term task of improving vocational education and training, accepting that the cap and net migration target will not solve the crisis in youth unemployment, and will only slow our economic recovery.

Matt Cavanagh is Associate Director at IPPR

Follow him on Twitter @matt_cav_