UK Edition
A deepening jobs crisis for young people threatens a “lost generation” of workers after long-term unemployment rose to its highest level for five years, experts have warned.
The latest official figures showing 220,000 under-25s unemployed for six months or more - the highest since early 2016 - overshadowed more positive news of a surprise fall in the jobless rate to 4.9pc in the quarter to February.
Experimental PAYE data also showed that younger workers accounted for more than half of the 813,000 employees who have dropped off company payrolls since March 2020, at 436,000.
Tony Wilson, director of the Institute for Employment Studies, said young workers were suffering the “cumulative impact of three lockdowns, dragging down hiring and shutting down youth jobs”.
While vacancies overall are 23pc below their pre-Covid peak, opportunities in areas typically reliant on younger workers such as hotels and restaurants are still down more than 70pc, pushing the number of under-25s in employment to a new record low.
Mr Wilson called for the Government’s Kickstart support scheme for younger workers to be extended beyond the end of this year, adding: “If we don’t act quickly, in particular by focusing our support on the long-term unemployed, then we are risking another lost generation."
The crisis is underlined by overwhelming applicant numbers for companies that are recruiting, according to major employers.
Kevin Blacoe, head of partnerships at broadcaster Channel 4, told a House of Lords committee on youth employment that the firm had received almost 6,000 applications for 15 posts in its trainee scheme.
Mr Blacoe said: “The demand is there. It is a real challenge because there are so many amazing applicants within that, and we want to be able to do more for those who apply.”
Campaigners also called for tax breaks to encourage hiring. Joe Marshall, chief executive of the National Centre for Universities and Businesses, said: “The nation’s young people have sacrificed their livelihoods so as to save the lives of others – we owe it to them to help their careers get back on track. The Government should temporarily abolish national insurance contributions for young people under the age of 25.”
Despite the concerns for younger workers, economists said the jobs market was “turning the corner” after a 50,000 fall in unemployed people to 1.67m, marking the first quarterly decline since the quarter to December 2019.
Economists cautioned however that the fall was driven by a rise in “inactivity” as the restrictions deter thousands in affected sectors from seeking work.
The pandemic fall-out has also been limited so far by the furlough scheme, which has cost the UK almost £58bn so far, although an estimated 56,000 workers dropped off company payrolls last month, according to ONS figures.
Companies have placed almost 5m workers in the lifeboat, but the Office for Budget Responsibility expects the jobless rate to rise to 6.5pc after the scheme closes in September.
Tej Parikh, chief economist at the Institute of Directors, said: "While the labour market continues to battle with the pandemic, there are signs it is turning a corner. As more of the economy reopens over the coming months, businesses will look to take on more staff to meet pent-up demand.
Redundancies also fell sharply over the quarter compared to last autumn when employers were shedding jobs ahead of the original end of the furlough scheme in October.
In the quarter to February, redundancies sank from a record high of 14.2 per 1,000 workers to 7.3 per thousand.
Samuel Tombs, UK economist at Pantheon, said: “Struggling firms have no incentive to fire workers at least until July, when they will have to start contributing modestly to the costs of the furlough scheme.”
Additional reporting by Tim Wallace