How Labour would solve the youth unemployment crisis

The government's approach has utterly failed. We need a revolution in the way businesses, ministers and schools work together to get young people into work.

Today, the government finally admitted the truth. Its Youth Contract has utterly failed to get our young people back to work. The flagship scheme is now on course to miss its target by more than 92% - no wonder there are still almost a million young people out of work. The benefits bill for young people is now more than £3.6bn a year.

Today, Labour says we simply can’t go on like this. The system is broken and its needs to change, and one of those changes has to be a revolution in the way small business, government and schools work together to get our teenagers job-ready. That’s the conclusion of a radical report by Labour’s Youth Jobs Taskforce, led by Alan Buckle, deputy chairman of KPMG, which we publish today.

We asked Alan to spend six months talking to business about just what they can do to help tackle Britain’s youth unemployment crisis. We found some stark conclusions. British business is ashamed of the UK's sky-high youth unemployment – and champing at the bit to help – but all too often the system is getting in the way.

Look at Westfield’s work in east London to make sure Newham residents were first in line for work at the new retail park. Look at the National Grid’s programme to employ young ex-offenders. It’s a scheme that’s helped over 2,000 young people get a job. And look at the way that Labour councils like Liverpool, Sheffield and Manchester are creating Apprenticeship Agencies to forge a new partnership with small business to get young people onto the first rung of the careers ladder.

Businesses small and large want to join forces in tackling this crisis. But the government is letting them down. Our report finds that Britain’s small businesses have all but given up on the Work Programme and the Youth Contract which are respectively, abysmal and anonymous. Even Nick Clegg admits the system isn’t working.

But what the report exposes is that the problem now runs much deeper. Careers services have become all but extinct and young people now lack any independent advice on what skills to develop to land a local job and a local career.

The world of work is changing all the time, yet our young people have no guarantee of independent careers education and guidance at school, and the government has scrapped the right to work experience. No wonder six in ten firms say school and college leavers have not developed the self-management skills they need for work. Education and work are just too far apart and the result is a situation where we have nearly a million young people desperate for work at the same time as  business is reporting skills shortages that are getting worse not better. We can’t go on like this. Our report suggests some big changes.

First, we have to find a new way to harness small business. According to the Federation of Small Businesses, nine out of ten unemployed or inactive people who move into jobs do so with small businesses. So we have to revolutionise the way apprenticeships work for SMEs. Liverpool, Leeds and Sheffield are creating apprenticeship training agencies to make it easy for an SME to say 'yes' to a young apprentice.

Second, it means exploring how small business, government and schools can come together to rebuild Britain’s careers service. Labour pioneers like Manchester City Council are piloting UCAS-style clearing houses for apprenticeships to help small businesses find the recruits they need.

Third, we should look at opening up access to job outcome data for schools, so parents can get a much better idea of how well local schools are preparing their children for the world of work.

Fourth, we have to multiply the ways we bring businesses and schools closer together. At the best primary schools today, pupils are offered 'work discovery' to inspire them about the world of work. That’s especially important for opening male-dominated professions, like engineering, to women. For older pupils, employers should accredit rigorous vocational qualifications as part of our Tech Bacc alongside a work placement. And why not encourage more business people to sit on governing boards? We would give all schools the freedom to innovate with the national curriculum, so they can work with local businesses to tailor courses for local labour market.

Finally, we need to look into ensuring that young people leave school with a plan for their future careers, whether that’s a university, apprenticeship or employment offer. No one should feel undersupported when they move into the working world.

For three years now, this government’s policy has been one effort after another to divide and rule. To find one 'welfare dividing line' after another. When did we ever achieve anything by turning on each other? We have only ever achieved great things when we’ve pulled together. That’s what needs to happen now. We can end the crisis of youth unemployment. Business is up for it. Schools and colleges are up for it. We’re up for it. We just need to get the Conservative Party out the way.

Liam Byrne is shadow work and pensions secretary; Stephen Twigg is shadow education secretary

Two youths sit on a bench in Corby, Northamptonshire. Photograph: Getty Images.

Liam Byrne is shadow work and pensions secretary; Stephen Twigg is shadow education secretary

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There's nothing Luddite about banning zero-hours contracts

The TUC general secretary responds to the Taylor Review. 

Unions have been criticised over the past week for our lukewarm response to the Taylor Review. According to the report’s author we were wrong to expect “quick fixes”, when “gradual change” is the order of the day. “Why aren’t you celebrating the new ‘flexibility’ the gig economy has unleashed?” others have complained.

Our response to these arguments is clear. Unions are not Luddites, and we recognise that the world of work is changing. But to understand these changes, we need to recognise that we’ve seen shifts in the balance of power in the workplace that go well beyond the replacement of a paper schedule with an app.

Years of attacks on trade unions have reduced workers’ bargaining power. This is key to understanding today’s world of work. Economic theory says that the near full employment rates should enable workers to ask for higher pay – but we’re still in the middle of the longest pay squeeze for 150 years.

And while fears of mass unemployment didn’t materialise after the economic crisis, we saw working people increasingly forced to accept jobs with less security, be it zero-hours contracts, agency work, or low-paid self-employment.

The key test for us is not whether new laws respond to new technology. It’s whether they harness it to make the world of work better, and give working people the confidence they need to negotiate better rights.

Don’t get me wrong. Matthew Taylor’s review is not without merit. We support his call for the abolishment of the Swedish Derogation – a loophole that has allowed employers to get away with paying agency workers less, even when they are doing the same job as their permanent colleagues.

Guaranteeing all workers the right to sick pay would make a real difference, as would asking employers to pay a higher rate for non-contracted hours. Payment for when shifts are cancelled at the last minute, as is now increasingly the case in the United States, was a key ask in our submission to the review.

But where the report falls short is not taking power seriously. 

The proposed new "dependent contractor status" carries real risks of downgrading people’s ability to receive a fair day’s pay for a fair day’s work. Here new technology isn’t creating new risks – it’s exacerbating old ones that we have fought to eradicate.

It’s no surprise that we are nervous about the return of "piece rates" or payment for tasks completed, rather than hours worked. Our experience of these has been in sectors like contract cleaning and hotels, where they’re used to set unreasonable targets, and drive down pay. Forgive us for being sceptical about Uber’s record of following the letter of the law.

Taylor’s proposals on zero-hours contracts also miss the point. Those on zero hours contracts – working in low paid sectors like hospitality, caring, and retail - are dependent on their boss for the hours they need to pay their bills. A "right to request" guaranteed hours from an exploitative boss is no right at all for many workers. Those in insecure jobs are in constant fear of having their hours cut if they speak up at work. Will the "right to request" really change this?

Tilting the balance of power back towards workers is what the trade union movement exists for. But it’s also vital to delivering the better productivity and growth Britain so sorely needs.

There is plenty of evidence from across the UK and the wider world that workplaces with good terms and conditions, pay and worker voice are more productive. That’s why the OECD (hardly a left-wing mouth piece) has called for a new debate about how collective bargaining can deliver more equality, more inclusion and better jobs all round.

We know as a union movement that we have to up our game. And part of that thinking must include how trade unions can take advantage of new technologies to organise workers.

We are ready for this challenge. Our role isn’t to stop changes in technology. It’s to make sure technology is used to make working people’s lives better, and to make sure any gains are fairly shared.

Frances O'Grady is the General Secretary of the TUC.