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Tackling youth unemployment in London: the role of apprenticeships

Authors: Ceri Hughes

20 May 2014

In 2012/13 there were more than 45,000 apprenticeship starts in London, but only just over half of these opportunities went to young people. Apprenticeships are not intended solely for young people but since they are often seen one of the key mechanisms to tackle youth unemployment it is useful to consider the impact they have had so far in the capital as well as what is missing from the city’s current strategy to tackle youth unemployment.

With a youth unemployment rate of 24 per cent, London is clearly not the easiest place for young people to find work. Our recent report on youth unemployment in London delves into the issue, focussing on the position of low-skilled young Londoners and those from disadvantaged backgrounds. We find that the headline rate masks sharp disparities across the city, with particularly high rates of youth unemployment in areas like Hackney, Tower Hamlets, Greenwich and Enfield.

So what is being done to support young people into work in London?

When asked what they are doing to tackle youth unemployment, many politicians point to apprenticeships. London Mayor Boris Johnson has set out a clear target of increasing the number of apprenticeships to 250,000 by 2016, the end of his second term as Mayor of London.

But whilst the commitment to grow the number of apprenticeships is welcome there is a long way to go before they are likely to have an impact on youth unemployment. Despite recent efforts to grow the number of apprenticeships, the proportion of under 18s engaged in some form of work-based learning, i.e. an apprenticeship, is estimated to be less than half the national rate, at 2 per cent compared to an already low 5 per cent for England as a whole in 2012.

Why aren’t more young people on apprenticeships in London?

First it is important to note that the trend for an increasing number of people aged over 25 to start an apprenticeship is not unique to London – at a national level recent increases in apprenticeship numbers have been driven by growth in the numbers of those aged over 25 taking them up. The number of people aged over 25 on apprenticeships jumped up significantly between 2009/10 and 2010/11, simultaneous with the change of government and funding and as efficiency savings heralded the end of the Train to Gain programme.

But there are also other factors to take into account in London. Historically fewer employers in London have offered apprenticeships creating an imbalance between supply and demand. This has resulted in intense competition for the places that are available. In 2012/2013, London registered the highest number of applications per place, with an average of 17 online applications per vacancy. But it is also the case that the majority of apprentices in London (71 per cent) were already working for their employer before they started their apprenticeship. Both the level of competition and the trend for employers to recruit existing employees potentially put young people seeking to enter the labour market at a disadvantage.

The cost associated with undertaking an apprenticeship may also put off some young people. The national minimum wage for an apprentice is £2.68, a mere 30 per cent of the current London Living Wage at £8.80. In fact the actual wages paid to apprentices tend to be higher than this, with a median wage of £3 and £5.37 for under 19 and 19 to 24 year olds respectively across England in 2012. But a young person could not afford to live in London on this wage without additional support – the median full-time wage for an apprentice would, for example, not even cover the cost of renting a room.

People on apprenticeships are training to undertake a role, and this is the rationale behind the lower pay rates. But the evidence suggests that apprentices in London are significantly less likely to receive a pay rise upon completion of their Apprenticeship (27 per cent in London compared with 35 per cent in England). In the absence of more data on the pay of London apprentices it is difficult to determine whether this is because London employers already pay more than other regions but it merits further investigation.

Other barriers to more young people taking up apprenticeships are a lack of awareness, whether of apprenticeships themselves or because young people do not have the skills and experience to think through how they should present themselves to employers. Schools with sixth forms have little incentive to encourage capable young people to consider apprenticeships. Meanwhile places on the government’s traineeships programme, which will offer some young people a route into apprenticeships, are still limited.

How do we improve this situation?

The mayor has committed to grow the number of apprenticeships in London. But this alone does not constitute a strategy for tackling youth unemployment in a city where many high-skilled and mobile people are also looking for work. It is clear that the scale of the challenge varies across London – but without a city-wide strategy for tackling youth unemployment many great initiatives go unrecognised, and it is harder for funders and charities to identify where there are insufficient support services and consequently where their efforts might be best targeted.

More investment is needed in initiatives that seek to increase ethnic, socioeconomic and gender diversity amongst young people entering apprenticeships and other routes into skilled work. This might include offering more taster days, and growing the number of traineeships in the capital.
In the run up to the local elections this week and in the build up to the assembly and mayoral elections in 2016, we need a stronger message from candidates on what they will do to support young people into work.