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The Work Foundation

Cutting the apron strings?

Authors: The Work Foundation

15 February 2011

Today’s labour market figures for October to December 2010 show record levels of unemployment amongst young people in the UK.

The unemployment rate amongst economically active 16-24 olds now stands at 20.5% - the highest since records began (in 1992) - and young people are more than 2.5 times more likely to be unemployed than the average person. Unemployment for young people went up by 66,000 on the previous quarter.

This highlights the importance of the findings in our latest report, ‘Cutting the Apron Strings? The clustering of young graduates and the role of the public sector’. Over the past decade, the public sector has sustained good jobs for young talented people outside of London and the South East.

We have shown that there has been a ‘spreading out’ of young graduates (people aged between 20-29 with degree level qualifications). Yorkshire and Humberside, the North East and the East Midlands have all seen increases in their national share over the last 10 years.

The ‘clustering’ of young graduates is a good thing. Places with more talented individuals benefit from greater economic growth, innovation and higher wages for the higher skilled and the lower skilled in the work force.

However, the public sector has been a key driver of these changing graduate retention patterns. At the beginning of the decade, banking and finance was the most common employment destination for young graduates, it is now the public sector. And around half of the public sector jobs taken by new graduates are considered ‘non ring fenced’ – those jobs that are most likely to be affected by the cuts.

Cities and regions in the north such as Leeds and Sheffield are now far more reliant on the public sector for young graduate employment than the South East. Almost 50% of young graduates in South Yorkshire work in the public sector compared to 15% in Central London. Cities such as Reading and Guildford in the South East have much stronger latent private sector demand - and more knowledge intensive employment opportunities for young graduates.

The public sector cuts announced last year could have profound implications. In the short term there could be further increases in young graduate unemployment – which has already reached record levels.

But in the longer term, the lack of good jobs for young graduates in the towns and cities that have been dependent on the public sector could lead to a ‘brain drain’ from these places to the South East and London as they look for work. This would further exacerbate regional disparities that exist between these places, and contribute to the decline of northern cities.

The Coalition must recognise these implications as they implement the cuts agenda. And there is a need for places outside of the South East to integrate highly skilled people into the local private sector. Failure to intervene could lead to increasingly challenging times for young people and towns and cities in the North. 













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