The labour market for young people in the UK Laura Gardiner, Resolution Foundation CRESR policy forum May 2016

2 Y OUTH EMPLOYMENT

3 A rollercoaster ride – youth unemployment rose higher than in the 1990s, but has fallen faster Source: ONS, Labour Force Survey

4 But youth employment rates were worsening relative to other groups before the crisis hit Source: RF analysis of ONS, Labour Force Survey

5 Youth labour market outcomes are quite strongly correlated with overall labour market strength… Source: RF analysis of ONS, Labour Force Survey Labour market participation rates across 20 UK sub-regions:

6 …and show greater variation across geographies… Source: RF analysis of ONS, Annual Population Survey Distribution of labour market participation of selected low activity groups across UK local authorities (16-64 year olds, 2014)

7 …the govt’s full employment goal must involve closing these gaps and driving rates further Source: RF analysis of ONS, Labour Force Survey Change in employment for low activity groups associated with moving to full employment: UK, year olds

8 P AY AND PROGRESSION FOR YOUNG PEOPLE

9 Young people faced the biggest earnings squeeze between 2009 and 2014 Source: ONS, Annual Survey of Hours and Earnings

10 Partly driven by the fact that job-to-job moves – key to pay progression – are furthest from peak

11 Employee training rates have been falling, likely to have particular consequences for the young Source: ONS, Labour Foruce Survey

12 Source: A recovery for all? Resolution Foundation, September 2015 DB pension scheme deficits of yesterday’s workers are weighing on the wages of today’s

13 Fuelling concerns that today’s younger cohorts will earn less over the life course Source: ONS, Annual Survey of Hours and Earnings (and earlier versions)

14 P OLICY DIRECTIONS AND CONCLUDING THOUGHTS

15 Policy focus on ‘getting people off benefits’ misses wider challenge Recent political discussion focused on getting young people off benefits and into work: – Moving young JSA claimants onto Youth Allowance with tougher conditionality – Restricting access to Housing Benefit for under-22s But challenge much bigger (Aug 2015, England): – 100,000 JSA claimants under 25… – …260,000 under-25s receiving benefits connected to sickness and single parenthood… – …but 830, year old NEETs = Wider challenge that many young people struggle to make effective transitions from education to work, and too many fall through the cracks along the way

16 Govt’s full employment goal must involve new action to address school-to-work transitions A new system for identifying and engaging those young people struggling in the transition from education to employment: – A tracking system, taking local risk of NEET indicators as its starting point, but extending coverage to older ages – Establish accountability for supporting those young people who are identified by the tracking system as not making swift transitions (e.g. handed to cities in devolution deals) – Support cities, local authorities and Local Enterprise Partnerships to provide more integrated services for young people, incorporating JCP and welfare-to-work provision, careers advice, apprenticeship access activities, and services currently provided or commissioned by local authorities (e.g. MyGo in Ipswich)

Source: BIS FE data library: apprenticeships 17 Apprenticeships drive should be focused on those transitioning from study or worklessness

18 And beyond employment entry, a huge challenge around pay and career progression Boosting confidence for a high-mobility labour market: – Young employees to switch jobs – Employers to take young people on A return to in-work training What do career pathways look like in a fast- changing, technology-rich, service-led economy? What else?

The labour market for young people in the UK Laura Gardiner, Resolution Foundation CRESR policy forum May 2016