More than a year has passed since Nick Clegg launched his flagship £1 billion Youth Contract. The Deputy Prime Minister pinned his hopes on the scheme, hailing it as “a major moment for Britain’s young unemployed people”. Clegg’s scheme, it was promised, would set young people on “the path to work” before the long term damage is done.
Yet one year on and youth unemployment remains one of the biggest challenges we face as a nation. The number of young adults seeking a job continues to cling to one million – and it has done for nearly four years. There is an absence of any official data but all indicators suggest the Youth Contract isn’t working and in order to tackle this most dangerous issue the government must be brave and revaluate employment policy, before it’s too late.
Indeed the scheme, which ties together a raft of training programmes and offers a £2,275 wage subsidy to firms, has already been widely criticised. The Commons Work and Pensions select committee concluded last year that the Youth Contract was not enough and would likely fail to reach Clegg’s eye-wateringly high targets. This was backed up by a recent Million Jobs/YouGov poll which found 80% thought the government’s youth unemployment policy was ineffective.
A sentiment that is echoed at the grass roots. Speaking at length with youth workers and employers reveals that – if they have heard of the scheme at all – they find it fuzzy, confusing and difficult to grasp. In other words the Youth Contract has failed to win the support of the very people it needs to be successful.
However we must give credit where it is due and there can be no doubt that the underpinning principles of the Youth Contract are good ones. It rightly works on the presumption that the only way we will crack down on devastatingly high levels of youth unemployment is to incentivise taking on a 16-24 year old. Yet businesses don’t have the time and resources to jump through hoops – and the vast majority cannot be doing with the Youth Contract.
After all any successful youth unemployment policy must appeal to businesses and support enterprise. A survey by the Recruitment and Employment Confederation found one third of employers were unaware of the scheme and 36% had no plans to use it. Clear cut tax and NI breaks would be a much simpler alternative and would garner support amongst firms – the very people we need on side.
Nor does the Youth Contract get to the root of the issue but instead papers over the cracks. Even when the economy is booming 7-9% of young people are out of work and today’s figures revealed 1.09 million young adults are not in any form of education, employment or training. This is unacceptable and hints at a fundamental flaw in governmental infrastructure. To overcome our structural NEET problem we need a redesign of training policies and an overhaul of the benefits system for young adults. Our school leavers should not be allowed to fall off a cliff but encouraged to take the opportunities open.
The government should look to countries where young people move smoothly into jobs. They should look to Germany, the Netherlands and Switzerland where, at under 10%, the youth unemployment rate stays at around half that of the UK. These countries offer a first class vocational education and apprenticeships hold real clout. The Germans famously use a “Minijobs” system where the under 25s are encouraged to take on one or more flexible, part-time job. They can earn under 400 Euros a month without paying any tax or NI and employers pay a flat rate of 30% to a single body. The scheme is easy to understand, supports employers and meets current labour market demands. The Germans and the Swiss are leading the way in terms of youth employment and we cannot afford to get left behind.
Looking at these successful schemes in Northern Europe further highlights the flaws in the Youth Contract. This flagship scheme is like fighting a forest fire with a water pistol. The government must do much more, much faster.
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* Lottie Dexter is the director of the youth employment campaign Million Jobs