David Miliband calls it a timebomb. Welfare Minister Chris Grayling is blaming the eurozone crisis. Business Secretary Vince Cable has a new scheme to persuade small businesses to take on apprentices (and teach them the “three Rs”). The CBI wants a Young Britain Tax Credit. Everyone is talking about the latest rise in unemployment and in particular the number of young people unable to get a first job. Is the problem as bad as it looks, can it get worse – and is the government coming up with the right answers?
Mr Grayling says “the 1 million figure is a bit of a distraction” because it includes 286,000 students looking for part-time work while they are studying; he'd prefer the figure to be computed differently. I'm not convinced by that argument. These students are trying to get work to support themselves through college or university, rather than run up burdensome levels of debt. They “need” work just as much as anyone else who lacks an income. So let's not cavil with the figures: this really is a very big problem. The number of unemployed 16-24 year-olds increased by 67,000 in the three months to September and accounts for more than a fifth of all young people in the UK.
Blaming the Eurozone fiasco is going to be a handy ministerial excuse for months and probably years to come. But we need to take a good hard look at the causes of youth unemployment here in the UK and work out how to tackle those causes first. Because this is by no means a new phenomenon, and the upward trend was in place well ahead of the Euro crisis.
The causes are many and varied. As Mr Cable's latest proposals acknowledge, too many young people have been failed by our education system and lack basic literacy and numeracy. It seems unfair to expect employers to allocate working hours to try to make up this deficiency. In the longer term, Michael Gove's school reforms are likely to bear fruit, but in the meantime the lack of job readiness of thousands of school leavers is a serious problem.
That is compounded by the availability of job-ready immigrant workers. Youth unemployment has been rising despite the creation of new jobs. Last year 87% of those jobs went to applicants coming into the country from abroad. The Coalition is taking steps to limit the influx of foreign workers but needs to be much bolder if it really wants to ease the competition against inexperienced young job seekers at home.
Welfare is also holding young people back. Labour devoted £2billion to the New Deal, in an attempt to keep school leavers off benefits. But the result was an increase in youth unemployment, even during the boom years. As benefits become more generous, the number of young people claiming them increased. The Coalition is getting to grips with some of this legacy, tackling in particular the abuse of incapacity benefit. But the lessons of the Labour years have not all been learned. As Policy Exchange pointed out in a report earlier this year, getting people off welfare is not just a matter of providing incentives to work, it also means applying tougher conditions.
Nowhere is this more important and relevant than in the case of school leavers and graduates. The habit of dependence, once acquired, is hard to shake off. So instead of receiving jobseekers' allowance, young people should be expected to move around the country to find work – as many of their working counterparts are doing already. Without welfare payments to fall back on, young people will be much more willing to take on low paid or low skilled work as a first step on the jobs ladder, and are likely to be more tenacious in holding on to those jobs. Employers frequently still complain that young apprentices and trainees, once recruited, fail to stay the course, unable to cope with the discipline of working hours or a job which doesn't fit their ideal.
One useful by-product of the Coalition's reform of university funding may be a decline in student numbers on those courses least likely to lead to a job. Labour hoped that the indiscriminate expansion of higher education would reduce (or at least disguise) youth unemployment. Its legacy is instead an increase in worklessness – with the added sting of unrealistic expectations and soaring student debt. Take the disillusioned media studies graduate interviewed by the BBC, working part-time as a checkout assistant, who admits that only 1 in 100 of her fellow media students have found work relevant to their degree course.
There are also plenty of costless remedies available to the Government on the regulatory front, to give young people the chance of a first job, as Dominic Raab explained here yesterday. Of course proposals such as the suspension of the minimum wage are more likely to have an impact if the interlinked problems of immigration and the benefits trap are tackled at the same time.
Indeed, none of these remedies will stand alone. That is why the government needs a concerted strategy. In contrast to the job funds, infrastructure projects and other pump-priming exercises which ministers so enjoy announcing, however, the remedies I have outlined are free (and some even entail cuts in spending). Labour exacerbated the problem, in a time of plenty. Now the Coalition must solve it, against a background of austerity.