The next decade could see millions of people either unemployed or in a job for which they are over-qualified, according to the Local Government Association.
The incoming chair of the LGA, David Sparks, has warned that a “lost generation” of around eight million people could be trapped in a future unemployment “twilight zone”, at risk of being stuck in low paid, insecure work, at a huge cost to the UK economy.
This could result in national productivity dropping by a quarter before 2022, the equivalent of a £374bn loss to the economy, with the government missing out on £164bn in potential tax returns, the LGA claimed.
It has warned that the current national employment and skills system is “not fit for purpose” and that the true scale of the problem is being hidden due to government figures focusing on the jobless and not on people who work part-time or are over-qualified.
The LGA has hit out at the “maze” of government skills and employment schemes – which total £13 billion – labelling them “confusing, fragmented, untargeted and ineffective”.
It is therefore calling for a “radical overhaul” of the system, by localising all back-to-work and skills schemes and bringing together services around those who are out of work.
Speaking at the LGA Annual Conference today, Sparks said that it is vital that councils are put at the forefront of the growing skills crisis.
"The current system for getting the unemployed into work needs radical reform. Hundreds of thousands of people – a lost generation – are being let down and sucked into an unemployment twilight zone, through no fault of their own. This staggering situation is only going to worsen without swift and decisive action.
"The solution is to ensure councils can target training and employment funds, and join up with services such as jobs centres. Local authorities – not central government – best understand the needs of their residents and how to address their skills needs.”
Sparks has called on the government to:
- Revitalise employment help through a new locally-led Youth Jobcentre, to bring together services around the needs of individuals
- Match training with local jobs by completing the transfer of further education funding to councils and local partners and investing in an independent locally commissioned careers advice
- Boost teenage participation in education and training to an all-time high by devolving under-performing national youth engagement schemes to councils
- Refocus employment skills and back to work support by strengthening the central role of councils.
Figures released by the LGA reveal that, by 2022, there will be 9.2 million low-skilled people chasing 3.7 million low-skilled jobs, leading to a surplus of 5.5 million low-skilled workers with an increasing risk of unemployment.