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Demos: NEET explosion in the next five years

·       Youth unemployment could hit 1.2 million

·       230,000 young people automatically unemployable

·       Employer’s NI contributions should be waived for workers under 25

The numbers of young people not in education, employment or training published yesterday  fails to accurately show the full extent of the youth unemployment crisis according to the think tank Demos. A forthcoming report exposes the inadequacy of level 1 and 2 NVQs that offer little or no protection from unemployment, and are shown to harm – rather than boost – young people’s earning potential.

Over 230,000 16-18 year olds who will leave education with NVQ levels 1 and 2 will swell the ranks of the unemployed over the next five years, bringing youth unemployment up to 1.2m, a 23 per cent increase on current numbers. Demos warns that though levels of youth unemployment at 10-15 per cent have been the norm throughout the 1990s, the current recession and education failures risk making 20 per cent youth unemployment ‘the new normal’ with spikes well above this.

The Forgotten Half, published in March, examines the paths of the 50 per cent of young people who do not go to university.  It finds poor support for young people in terms of career advice and qualifications to help them make the transition from school to work in an increasingly competitive job market.

The report will recommend waiving or reducing employer’s National Insurance contributions for workers under the age of 25 to get more young people into the workplace.  Employees aged 16-21 would have their NI waived, with contributions tapering for 22-25 year olds. Demos says the cost to the state would be rapidly made up by preventing young people moving onto unemployment benefits for long periods and mitigating the effect of a lost generation.

Jonathan Birdwell, NEET expert and author of the report said:

“Young people who spend long periods unemployed at the beginning of their careers work less and earn less throughout their working lives. Ten to fifteen per cent youth unemployment is already too high. But we’re looking at 20 per cent becoming the new ‘normal’ level with crises driving this figure even higher.

“There is drought of entry-level jobs meaning the door to work is closed to many young people.  Those who don’t go to university would normally acquire skills in their first jobs, but this disappearance of these position means young people are getting hit twice – they get neither a salary nor skills.”

Notes to Editors:

Recent figures put the number of unemployed 16-24 year olds at 965,000.  This represents 20.5 per cent of 16-24 year olds in the labour market (approximately 4.7 million) and excludes those in education. Based on an analysis of returns to wages, young people with NVQ 1 and NVQ 2 do not receive any wage return, meaning that their qualifications are of little to no value in the current labour market if not supplemented with an apprenticeship.

Based on the 2009 Provision Participation Rates published by the Department for Education, there are approximately 230,000 young people aged 16-18 gaining these qualifications without doing apprenticeships. When these young people enter the labour market (bringing the total to approximately 4.9 million) it is likely to bring the total number of unemployed 16-24 year olds to 1,195,000.

The Forgotten Half by Jonathan Birdwell, Matt Grist and Julia Margo will be published in March.

For more information on the report, or media requests, contact:

Beatrice Karol Burks

beatrice.burks@demos.co.uk

020 7367 6325

079 2947 4938