The looming recession, young workers and young NEETs

Rates for UK youth unemployment have been falling sharply since the end of the pandemic. At the height of Covid just over 1 in 7 (13.7%) of the 16-24 age group were recorded as jobless. This had fallen to 10.6% for the first quarter of this year. Young people were the group worst affected by the previous downturn caused by the financial crisis when unemployment amongst 16-24 hit 20%, but in the months that followed, it halved.  The jobless rate for 18–24-year-olds is now 9.4% – down from 12.4% a year before. Figures for the last quarter show 77.9% of this group working. 

Official youth unemployment figures are complicated as they invariably include large numbers who remain in full-time education but work, or want to work part-time. If these are excluded this figure comes out even lower at 8.8%.  There have also been further (albeit small) falls in those young people ‘economically inactive’. Figures for the last quarter show 77.9% of 18–24-year-olds not in full-time education, working.  If students are included, then record numbers (63.6%) are in some sort of paid work.

While this may be welcome, these figures don’t tell us about the sort of jobs young people are going into.  As previous posts have argued, many have filled low paid service sector roles vacated by Eastern European workers returning home post-Brexit, while student working has increased significantly as campuses and the hospitality sector have reopened post-pandemic. It’s also clear that as young people have returned to the labour market after Covid, they have found the balance between ‘core’ and ‘precarious’ employment continues to shift in the direction of the latter.

We also only have limited amounts of information about the extent of ‘churning’ – the rate at which somebody moves out of one job and into either another one, or back into temporary unemployment or economic inactivity –amongst young workers. High levels of churning are associated with economies in which more and more jobs are insecure and temporary.  But if labour markets have tightened post pandemic, with the economy heading for a prolonged period of stagflation, if not outright recession as the Bank of England hikes up interest rates, (rather than mediating the cost-of-living crisis by reducing them!) then just like in the period after the financial crash it will be those young workers who have served as a ‘reserve army’ of labour who will exit the labour force first.

All the young NEETs

Unemployment statistics should also be seen as separate to those for NEETs (those ‘Not in Education, Employment, or Training’).  Unlike falling unemployment, in the period since the financial crash, as the graph shows, NEET rates have not only stabilised but are now just 1.0% down on pre COVID levels. There has been a small increase in the first quarter of 2022, with the current total at just over 700,000 (an estimated 10.4% of all 16–24-year-olds still in this category, up 11,000 on the quarter (387,000 were men and 317,000 were women). According to ONS, only 230,000 NEETs can be classified as ‘unemployed’.

What is surprising and an issue for policy makers, is the number of 16- & 17-year-olds who are no longer in full time education but are being classified as ‘economically inactive’ – considering the ‘participation rate’ has been raised and you can only leave full-time education before 18 if you have   work ‘with training’ (generally an apprenticeship). Yet the latest labour market figures show almost 1 in 12 in this category, but only about a third employed. This situation hasn’t changed significantly from 10 years ago when 15% of the age group left education at 16 ( they were then legally allowed to do so) but only 40% of these 16-17 year olds were in employment.

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