New Year insights and the elephant in the room: the youth employment crisis, deregulation, and low-quality work

Blog posts

12 Feb 2021

Cristiana Orlando, Health Foundation Research Fellow

One month into 2021, the new year has started with a wealth of insight into the deep and wide-ranging challenges brought about by the pandemic and the recession, particularly for young people. The recent Prince’s Trust Youth Index shows 60% of young people, out of a sample of 2,180, say that getting a new job feels ‘impossible’, over half feel it’s harder to ask for employment support, and more than a third say they have started rethinking their career goals and aspirations. These figures speak of multiple generations of young people, at all stages of education, who feel increasingly discouraged, disoriented and hopeless around their prospects and their future.  The JRF tells us that poverty levels have not budged in the UK for the past 15 years, with one in five people living in poverty in 2019, and that before Covid-19 incomes were falling fastest for those earning the least. What’s more, in-work poverty levels were rising before Covid-19 and will rise even faster if action is not taken.

Over the past decade the proportion of people starting their careers in low-pay and low-security sectors has increased by 50%, while zero-hour contracts surpassed one million at the height of the pandemic – a 536% increase from 2010. The Centre for Cities warns us that in many areas of the UK, the economic impact of the crisis has made ‘levelling up’ four times harder, and that even those parts of the country which were doing well before the pandemic, now risk ‘levelling down’ instead with some local economies experiencing slower recoveries.  Although responses to youth employment support provision have been prompt, implementation has been slow, and there are still questions as to whether the urgency around rapid job creation might come at a price, namely deregulation, the elephant in the room which we are all aware of but don’t quite know how to address.

In times of recession labour market deregulation is a common response to declining employment levels. The UK labour market has traditionally been highly deregulated, with the policy discourse stressing flexibility as an economic advantage for employers and employees alike. However, evidence points to a contrary position. At least a third of jobs in the UK could be described as poor, either because badly balanced or of low quality, as flexibility tends to be one-sided in favour of employers. To address this issue, a new Employment Bill was announced in 2019, which looked to introduce better employment protection and rights enforcement. This was a first step towards making the 2018 Good Work Plan a reality, but no further steps have been taken on the Bill since its announcement two years ago. Hopes for progression are further dampened by Brexit, with concerns around a reduction in existing employment rights now that the UK is now longer bound by EU regulation. 

Those who work in low-paid, insecure work have less protection and rights due to the ‘flexible’ nature of their jobs - chief among these are young people.  IES research indicates that at the height of the pandemic low-paid employees have been significantly more likely to have had their hours reduced or lost their jobs. Young people are particularly vulnerable in these circumstances, as they enter the labour market already at a disadvantage, with little to no work experience, and are more exposed to ‘last in, first out’ redundancy policies and lower employment rights and protection in general (for example, they cannot access the National Living Wage until the age of 25).

Furthermore, as IES analysis of the latest labour market statistics highlights, young people still account for almost half the fall in employment. New IES research also evidences the differential impact of the pandemic on different groups of young people, with those in elementary occupations and those from ethnic minority backgrounds hit hardest, accounting for two thirds of the total fall in youth employment respectively. The research also warns of the hard impact of hiring freezes on those at transition points (-3% at age 18 and 20, and -4% at 22) and on young people combining work and study, highlighting the potential scarring effects in the long-term due to a lock-in effect on skills and employability.

As the economy reopens and recovers, we might see an increasing number of young people, particularly more disadvantaged young people, moving into low paid work, as better opportunities are taken by more experienced workers, further entrenching trends over recent years. This includes an increase in precarious contracts and a further decrease around in-work progression, particularly as the planned financial incentives for employers indicate a shift in the government’s agenda further away from fair pay regulation for young people.   

We have to be cautious when considering the argument that ‘any job is better than no job’, particularly when opportunities for progression are increasingly constrained. A lesson to be learned from the last recession is that short-term wins may come at the price of long-term losses with negative effects on growth and productivity, increased in-work poverty, and worsened health and life outcomes for young people in the long run. Instead, increased attention should be given to supporting young people into better quality jobs in the economy with stable pay propositions, progression opportunities, as well as fair terms and conditions. More importantly, there should be a focus beyond pay, on ensuring that young people can access meaningful opportunities, which support work-life balance and, help them to develop life skills and healthy lives.

The issues outlined in this blog are deeply interconnected. To address them, government and decision-makers need to act now to protect and improve the quality of work opportunities for all young people, by:

• Introducing minimum hours regulation to reverse the trend in zero-hours contracts.
• Progressing work on the Employment Bill, improving, strengthening and unifying protection and enforcement regulation for all workers, including young people.
• Progressing action on the Good Work Plan and strengthening the focus on young people. 
• Ensuring provision and investment are distributed equally, and include quality, accessible, and real opportunities for disadvantaged young people.
• Introducing a ‘Quality guarantee’ within the Opportunity guarantee, ensuring provision such as Kickstart and Restart include clear and enforceable quality assurance mechanisms.
• Focusing on a good job, not any job, recovery which invests in the growing sectors of the economy, and providing inclusive pathways to these opportunities.
• Strengthening the focus on in-work progression and ensuring employment provision incorporates meaningful in-work support.
• Promoting good youth employment among employers, by developing a ‘talent pipeline’ framework for employers and developing a strategy on the long-term benefits of investing in the young workforce.

Only by addressing these challenges through a holistic and comprehensive approach, which addresses both legislation and practice, will we be able to truly invest in young people and the invaluable potential they bring for a strong and equitable recovery .

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 Any views expressed are those of the author and not necessarily those of the Institute as a whole.