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A budget for…youth unemployment

Authors: Jonathan Wright Jonathan Wright

23 March 2011

Today the Chancellor rightly highlighted the importance of tackling the UK’s growing youth unemployment problem, but he could have gone further.  The latest data shows that the number of unemployed young people has reached 974,000 – the highest since records began in 1992.  This figure has been rising for the past decade - a young person is now two and half times more likely to be unemployed than the average person.

 

The government is also concerned with the relatively poor level of skills found amongst young people in the UK.  In particular, the country has weak intermediate technical skills; and these skills are becoming more in demand. There are specific skills shortages in the manufacturing sector. The Wolf review of vocational education in the UK found that for many it does not offer a clear pathway to higher education or employment - between a quarter and a third of 16-19 year olds are on low-level vocational qualifications which have little to no labour market value. 

The UK also provides fewer apprenticeships than comparator countries – one in ten UK employers provide them compared to one in four in Germany. However, there is evidence that higher level vocational qualifications can add real value; for example, achieving a BTEC National can boost an individual’s lifetime earnings by up to £92,000.

 

The budget makes some appropriate steps to address these issues, focussing on increasing participation (contact) in the labour market and reforming education and skills provision.  Firstly, the government will provide £180 million for 50,000 additional apprenticeship places over the next four years.  40,000 new apprenticeships have been announced for young unemployed people and 10,000 advanced and higher apprenticeships for SMEs.  The government is also committed to increasing the work experience scheme from 20,000 places to 100,000 over the next four years.  Although this increase is welcomed, we must ensure these extra places are of high quality.

 

The second major announcement is the establishment of 24 University Technical Colleges by 2014.  These colleges will focus on vocational training for 11-19 year olds in ‘manufacturing heartlands’, and will bring together universities, colleges and businesses in the local area.  They will match local supply and demand and provide high quality work placements, with the aim of addressing the UK’s technical skills shortage problem.

 

These announcements are welcomed – but could have gone further.  As youth unemployment nears 1 million, there will be thousands of young people untouched by these measures.  In order to make sure our young people are more work ready there needs to be a focus on ensuring that local education providers are meeting the demands of local labour markets, and that vocational education is of high quality.