Can the Youth Contract help young people furthest away from the labour market?

There is a growing body of research indicating that more focus, inventiveness and co-ordinated action is needed from central government to improve the employment prospects of young people who are furthest away from the labour market. When looking out how the Coalition’s centrepiece policy, the Youth Contract, is designed to help these young people it becomes apparent that what is on offer is not enough to meet the scale and nature of the challenge.

It is widely acknowledged that youth unemployment started to rise four years before the 2008 recession. However, ACEVO’s recent Commission on Youth Unemployment reported NIESR research (funded by the Nuffield Foundation) showing that one in 10 people turning 16 between 1991 and 2003 experienced difficulties over the following five years establishing themselves either in work or education. This suggests that even during a time when the economy grew and there was some central government intervention (New Deal for Young People of those aged 18-24), a core of young people did not positively benefit. The latest Labour Force Survey shows that there are now over a quarter of a million young people experiencing long-term unemployment. Another study in the ACEVO report found that 35 per cent of long-term unemployed young people were not claiming any benefit entitlements (Lindsey MacMillan of University of Bristol). Similar analysis by The Work Foundation found that ‘a large discrepancy’ existed between the number of long-term unemployed young people and the number of those on the claimant count. The overriding impression is that a large number of young people are structurally disengaged from both the welfare system and labour market.

In spite of this bleak picture, both Coalition partners made no direct and dedicated provision to address this issue in their respective manifestos at the last General Election. It was not until November 2011 – just a few months after widespread social unrest – when the Deputy Prime Minister announced the Youth Contract. The Youth Contract is essentially a £1 billion spending commitment for over a three year period, where direct monetary payments are made available to help the supply of young people in the labour market (an increase in apprenticeships and work experience placements) and the demand for young employees (employment and apprenticeship wage subsidies). It is a fairly comprehensible package of support (it was originally outlined in a two page document) and has been swiftly implemented. However, while these initiatives and investments have been widely welcomed, the majority of young people who are eligible to benefit will be engaged with the Job Centre Plus, the Work Programme or the National Apprenticeship Service. The structurally disengaged will miss out.

The evidence suggests that the Coalition’s policy response does not go deep enough to reach those furthest from the labour market. Furthermore, it is highly likely that this problem will remain for a while and will not go away in more favourable economic times.