The government has
announced a new youth employment package, worth £1
billion over 3 years, aimed at tackling the rise in
young people are not in education, employment or
training (NEET). The package includes wage
subsidies for employers to hire young jobseekers
on Universal Credit, alongside changes to the apprenticeship
system to shift funding towards apprenticeships
more likely to be taken by
younger people.
Taken together,
the government expects
the wage subsidies to
support 150,000 jobs over the
next three years, up from 55,000
before yesterday's announcement. The
cost of hiring a long-term (6+
months) unemployed young person on Universal
Credit, full-time for 6 months on the minimum
wage, will be reduced
by between 27% and 87% depending on
age and unemployment duration. However, the wage
subsidies will only directly benefit a small
share of young people who are
NEET.
The government's apprenticeship
reforms remove public funding
from apprenticeships that currently account
for 10% of apprenticeship starts. This
is in addition
to a decision earlier this
year to remove funding from Level 7 (master's-level)
apprenticeships for those aged 22 and over, which
accounted for a further 10%
of apprenticeship
starts last year. The vast majority
of apprentices taking these qualifications are aged 25
and over.
Xiaowei Xu, a Senior Research
Economist at IFS and an author of the briefing,
said:
“Yesterday's announcement expands
support for hiring of young
people on Universal Credit. In particular,
there is a good case for additional
support for those unemployed for 6–18 months, who
can be reached before their skills and
confidence are eroded by long spells out of work,
though it remains to be seen
how much they will increase employment in the
long term .
The newly
announced policies will benefit only a small
share of nearly 1 million young people who
are currently not
in employment, education or
training (NEET). In particular, they do not
target over 300,000 young people on Universal
Credit who are not required to search for
work, mostly due to health
conditions. This group
has increased substantially in the
last few years. Stemming its rise
will be important for making progress on youth
employment.”
ENDS
Notes to Editor
Assessing the government's
youth employment package is an IFS briefing by
Imran Tahir
and Xiaowei Xu.
The briefing is
available to read here on the IFS website
