There are 4.7m young adults aged between 18 and 24 in England. They are the corona generation, worried about attending full-time higher education, concerned about their jobs and fearing unemployment.
At the end of 2019, nearly 1.5m of them were in full-time education and 2.45m were in employment. A further 450,000 were economically inactive – having no job and not having looked for one in the past four weeks – and only 250,000 were actually unemployed.
Recessions always hit 18- to 24-year-olds the hardest and this one is no different. However, to make matters worse, this time job losses among the 2.45m in employment (excluding student jobs) is concentrated on low-paid, low-skilled jobs that may never return.
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Background: Number of NEET young people rises to more than 770,000
Many of the 230,000 or so graduates leaving full-time higher education this summer will cascade down the labour market unable to get graduate-entry jobs and picking up non-graduate jobs in front of those who did not go to university.
For 18- to 24-year-olds not in full-time education, unemployment in England could triple from 5 per cent (250,000) to 15 per cent (750,000) by winter. And with 450,000 young adults classed as economically inactive, we could have 1.2m unemployed and inactive 18- to 24-year-olds, nearly a quarter of the 18 to 24 population. The government must throw the kitchen sink at preventing this scale of unemployment and inactivity.
To be clear, preventing joblessness and inactivity among 18- to 24-year-olds on this scale must be on the agenda at both the Department for Education (DfE) and the Department for Work and Pensions (DWP): it’s an agenda that covers full-time higher education, job creation, further education and apprenticeships.
We suggest that the government adopts a five-point plan.
Expand full-time post-graduate education
Although counter-intuitive perhaps, the DfE should promote recruitment on full-time one-year post-graduate master degree courses by 22- to 24-year-olds above the current 44,000 figure. Graduates this summer would be shielded from competing in a desperate labour market. They would also be less likely to take non-graduate jobs from those who did not go to university.
Income contingent loans worth £11,200 are available to fund post-graduate master level degree courses. Some universities have priced them at £8,000, which, in effect, leaves £3,200 as a maintenance loan for living and travel costs. This compares to £3,062.80 unemployed graduates would get if they received jobseekers’ allowance (JSA) of £58.90 per week for a year.
Expand full-time undergraduate higher education
The DfE should also seek to maximise participation in full-time undergraduate degrees and vocational sub-degrees. Eighteen- to 24-year-olds can shield themselves from the labour market by studying full-time because they are entitled to a means-tested maintenance loan worth at least £3,410.
Support apprenticeships
A third part of the plan is to encourage employers to provide apprenticeship jobs. Non-levy-paying employers should no longer be required to make a 5 per cent contribution to the cost of training. Wage subsidies should be paid to employers for 19- to 24-year-old apprentices in line with 16- to 18-year-olds at £1,000 or even higher.
But the government must be careful not to over-promise with talk of an apprenticeship guarantee. Apprenticeships are jobs that require an employer, and many employers – large and small, especially in the private sector – will go into administration or be firing rather than hiring when the job retention scheme ends in October.
Some of the 300,000 apprenticeships jobs held by 18- to 24-year-olds have already gone. They will contribute to the extra 500,000 unemployed young adults by winter. The danger is that every one of them will want and expect an apprenticeship.
The language of a guarantee is that an apprenticeship – based on a job lasting at least 12 months, and linked to a recognised framework or standard – is available if not from day one then within a month of being unemployed. Young people will feel terribly let down if they have to be unemployed for six months before they are offered an apprenticeship.
A subsidised job or training place
By contrast, an important part of a youth unemployment plan is a subsidised job or training place lasting, say, six months. Administered by the DWP, every 18- to 24-year-old out of work at the 26-week stage should be able to progress on to these options.
Although a necessary part of a youth unemployment plan, a subsidised job creation scheme could prove less effective this time around. If 18- to 24-year-olds are not offered a permanent job when the scheme ends, they could well be back on benefit because low-skilled minimum-wage jobs remain elusive in the Covid-19 labour market.
Access to training and retraining must be central to a youth unemployment plan so that young people can get the high-skilled jobs of the future. The DWP, however, tends to offer short-term training programmes that last three or six months. It does not like to support year-long training programmes so that 18- to 24-year-olds can achieve full level 2 and 3 qualifications because of the need to pay benefits of £3,062.80 per year.
Full-time further education entitlement
And so, the fifth part of a comprehensive youth unemployment plan should be an entitlement to full-time study in further education to achieve a first full level 3 qualification. Over a third of 25-year-olds in England do not have a level 3 qualification.
Alongside the present entitlement to free education to achieve a first full level 3, the DfE should introduce a national system of maintenance loans worth £3,062.80 per year – equivalent to the JSA 18-24 rate of £58.90 per week for 52 weeks – for a maximum of two years.
Such an entitlement would shield 18- to 24-year-olds from the labour market, reduce youth unemployment and increase the supply of vocational level 3 qualifications required for the high-skilled jobs of the future.
Susan Pember is the director of policy for HOLEX and Mark Corney is a post-16 education and labour market consultant
