Employers must be given more incentives to hire young people in order to avert a youth unemployment “time-bomb” that will cost the country £9.2 billion per year from 2013, a report has warned.
The study undertaken by the Association of Chief Executives of Voluntary Organisations predicted that, from next year, some £2.9 billion per annum – the total annual budget for Jobcentre Plus – will go on lost tax revenues and paying out unemployment benefits. A further £6.3 billion a year will also disappear in lost output.
But this year alone, high levels of worklessness among 16 to 24-year olds will result in lost tax income and benefits payments of a huge £4.8 billion – more than the entire further education budget for all 16 to 19 year olds – while lost output will cost the economy £10.7 billion.
Youth unemployment leapt by 52,000 between September and November last year to hit 1.04 million or 22.3%. The official figures, which include 313,000 people who are in full-time education but looking for work, are the highest since comparable records began in 1992 – although lower than in the 1980s.
“The human misery of youth unemployment is also a time-bomb under the nation’s finances,” the report warned.
As a result, ACEVO called on the government to “up its game” and provide employers with more incentives to hire under-25s. It also needed to find ways of preparing them more effectively to progress either into further education or work, the organisation added.
Jonathan Portes, director of the National Institute of Economic and Social Research, which contributed to the study, told the Daily Telegraph that the impact of failing to tackle the issue would cost the country dear for years to come, long after the economy as a whole had recovered.
“NIESR forecasts show unemployment is likely to continue to rise and remain at high levels for some time. The young are particularly at risk,” he said.
But there was no single cause of the problem. “At the moment, we face both low levels of demand for young people’s labour, with the numbers of young unemployed rising to record levels and a long-standing problem of structural youth unemployment, which was a serious issue even when the economy was doing well,” Portes added.
**** Prime Minister David Cameron announced today that employers and training providers could now bid for a £6 million tranche of the £25 million Higher Apprenticeship Fund.
The first round of bidding kicked off in July last year and 19 partnerships, which included 250 employers, were awarded £19 million to provide 19,000 degree-level apprenticeship places.
Also open for bidding is the new Employer Ownership pilot, which was launched as part of the government’s Growth Review last November and currently has up to £250 million in the pot.
The scheme is intended to route public money directly to organisations in order to encourage them to develop vocational training programmes either by themselves or in conjunction with training providers.
Finally, small firms are to be offered an incentive of £1,500 to hire an apprentice in a move that is hoped to create 40,000 new places over the year ahead.
