Get our youngsters back to work

Youth unemployment has become a national crisis; time is running out for the government to act

I have been trying for at least a year to get people to take note of the coming crisis of youth joblessness, but few have been listening. At long last the political parties are starting to pay attention. The newspapers are full of talk of a lost generation and, sadly, they may be right.

The reason the crisis has started to grab headlines is that the number of young unemployed is heading towards a million. Not something any government wants to see in the run-up to a general election. The catalyst in the past week, though, was the publication of the number of Neets - those not in employment, education or training - which has risen to 1.082 million, or 18 per cent of the youth population. These numbers will get worse before they get better. This is a totally unacceptable national tragedy.

It doesn't help that the number of young people entering the job market in the midst of this recession is bigger than it has been for at least
a decade and, as the chart (below) makes clear, is bigger than it will be in future years. There simply aren't enough jobs for them.More than 100,000 young unemployed people have degrees. And many of them have student loans to pay back. They come from every university across the land, and from every parliamentary constituency. Many have large collections of letters saying: "I regret to inform you your application has not been successful. Good luck in your future career." And they feel helpless and lost and don't know what to do. It's time to help them.

Youth unemployment graph

It's everyone's problem.

I have examined the most recent data from the Labour Force Survey, for the second quarter of 2009, and found that the unemployment rate among those with a degree is roughly 11 per cent. But this pales in comparison to the unemployment rate among young people without qualifications (38 per cent), or who are black (30 per cent), or Asian (26 per cent), or living in the West Midlands (32 per cent). The length of time they remain unemployed is also on the rise. Nearly 200,000 young people under the age of 25 have been unemployed for a year or more.

Youngsters without skills or qualifications are especially at risk. The danger is that they lose self-esteem and do not make a successful trans­ition from school to work, potentially scarring them for ever. That is bad for them: it means more unemployment, lower wages, less happiness and worse health later in life. It is also bad for the rest of us, not just because of the lost output, but because of the social costs. Crime rates in general and property crime in particular tend to rise in these circumstances. Above all, these are our children and it's our problem. Unemployment makes everyone unhappy.

University applications have risen this year, again, but there are not enough places, even though many candidates are suitably qualified. I have not been given an adequate explanation why the government believes it is better to have young people on the dole than in university. The universities have room for them - several vice-chancellors have told me so. They just need the go-ahead and some money. And why aren't they getting it, exactly?

Presumably this big increase in the number of Neets was not unrelated to the four surprise youth unemployment guarantees unveiled in the Queen's Speech on 18 November.

-An extra 10,000 places for unemployed 16- to 17-year-olds, guaranteeing a place in education from January.
- A commitment that 18- to 24-year-olds will be offered a guaranteed job or training and will not have to wait until they have been out of work for a year.
-A promise to help 18- to 24-year-olds find work from day one of making an unemployment claim.
-A promise that new graduates still out of work after six months will have access to a high-quality internship or training, as well as help to become self-employed, in partnership with the Federation of Small Businesses.

This is on the right track, but these numbers are trifling. The extra money amounts to just £200 for each unemployed kid, which isn't going to do much. Too little, too late.

Be bold, Darling

My solution is to: a) raise the education leaving age right now to 18; b) remove National Insurance contributions for everyone under 25 to price them into jobs; c) offer a trainee teacher place in every school in the country for unemployed graduates, pay them a stipend at least equal to the benefits they would receive on the dole and give them some training.

It makes sense to involve the private sector, so the Confederation of British Industry's announcement of a "five-point plan to tackle youth unemployment" is encouraging.
1. Help employers offer more apprenticeships by offering a subsidy of £2,500 for firms that offer additional apprenticeships to young people or employ an apprentice for the first time. This money would not subsidise existing apprenticeship places.
2. Ensure that employing young people is attractive. The employment prospects for young people with low skills are very
sensitive to wage levels. Youth minimum wages and apprentice rates need to be set with this in mind.
3. Practical help for young people to get a job.
4. Offer more young people work experience.
5. Ensure the education system teaches basic numeracy and literacy skills.

These are good ideas that we should support and fund.

Be bold, Chancellor Darling, and announce in the pre-Budget report additional monies to get our youngsters back to work. Let's reduce those youth unemployment numbers before it's too late. This is a national crisis, honestly.

David ("Danny") Blanchflower is professor of economics at Dartmouth College, New Hampshire, and the University of Stirling