Youth joblessness falls but uncertainties continue

Yesterday’s ONS labour market figures show unemployment down to 4.6%, falling from 5.5% at the height of the pandemic, with over a million vacancies.  Young workers have been the hardest hit with the 16-24 unemployment rate reaching almost 15% by September 2020, but this is now also falling  – down  to 12.9% in the May-July 2021 quarter. For 18-24 year olds not in full time education, the most significant category, joblessness is down to 10%.

But there continue to be major uncertainties. As was the case in the labour market generally, youth unemployment never rose to the extent predicted at the start of the pandemic and young people have been the group with the highest proportion of jobs furloughed, particularly because of large numbers employed in the sectors like hospitality.  At the end of June, 16-24 year olds made up 1 in 5 of those on the job support scheme, while 10% of all eligible jobs held by 18-24 years have continued to be furloughed.

Furlough has been a much more important factor in protecting young people, than the governments ‘kick-start’ programme for example, in which only a small proportion of the 250 000 new job opportunities promised have materialised –estimates are as low as 16,500. Neither have the promised new apprenticeships materialised. But with furlough being wound down, many young people among the million plus workers still dependent on it, are likely to find they have been in ‘zombie jobs’ –where rather than being re engaged they will be made redundant. The travel industry, for example, is predicted to shed 100 000 jobs when furlough ends.

Meanwhile, the numbers in full-time education and of those applying to university have also risen during the pandemic. Up by over 300,000, this has also helped to lower youth employment. Increased participation in education has been a feature of previous economic downturns, yet according to graduate agency High Flyers, half of the country’s top employers, though receiving 40% more applicants have cut their recruitment programmes. The FT graph below compares UK graduate recruitment with elsewhere.

Of course, at the lower end of the labour market, the increase in vacancies, linked to a huge decline in the number of EU workers remaining in the UK because of Brexit – estimates are that 250 000 plus have left will, as government reminds us provide ‘opportunities’ for those young people entering the labour market (or re-entering via furlough) and not able to find anything else.

But compared with lorry drivers, now finding themselves in a unique situation, it’s doubtful wages will rise for this ‘reserve army of labour’. In sectors like hospitality, many existing part time staff will welcome the opportunity to work more, (the number of people in part-time work because they can’t find a full-time job remains above pre-crisis levels) while profit margins are often so low so that in response to rising labour costs, many businesses would either close, cut back or automate – in hospitality and leisure, automation has increased because of social distancing requirements. Alongside a general ‘deregulation’ at lower ends of the labour market, trade union membership is painfully low (less than 1 in 10 young workers belong to one). Because of the nature of work and because of the high staff turnover, these sectors are difficult to organise.

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