Youth unemployment is an issue that is fast becoming the crisis of our time. 60 per cent of today's NEETs have never had a job, up from 40 per cent in 2005 when I was Education Secretary. The UK has diverged sharply from comparable economies, and where a decade ago our NEET rate sat broadly in line with European peers, today only Romania records a higher figure.
I have known Alan Milburn for many years, serving together in Cabinet, and his interim report on young people and work earlier this year was a thorough and alarming analysis of the factors shaping this crisis. The diagnosis he has set out, that the numbers are worsening relative to comparable economies, that the welfare system is absorbing young people rather than activating them, and that too many of the interventions on offer do not reach the young people most in need, is accurate.
Labour governments only succeed when they are the party of work. Right now, a generation isn't working.
In search of a solution, the current government has reached, understandably, for tools that have worked before. The Youth Guarantee echoes the New Deal for Young People that we introduced in 1998, which met its target of moving 250,000 young people off benefits and into work, and remains one of the most effective labour market interventions this country has delivered. The Connexions service, built to provide every young person with a personal adviser and a route back into education or employment, is a frontrunner to the AI employment advisers of today.
But the challenges we face now are not the same as then, and the tools that worked then will not be sufficient on their own now. When young people are out of work because the labour market seems to have closed its doors, guaranteed jobs and personalised advice can bridge the gap. When young people have never worked at all, when their inactivity is rooted in poor mental health, when they have been disengaged from the world of work since long before they left school, we must do more.
The answers to fixing this focus on both getting our young people work-ready, and on opening our labour market to young people, as a new report by the Jobs Foundation, Jobs and Education, published today shows. On one side stands the school system, which is not consistently supplying young people with the attitudes, behaviours and workplace readiness that employers are looking for. On the other stands the world of work, where rising employment costs and regulatory pressure are making employers, particularly smaller ones, increasingly reluctant to take a chance on someone without experience.
On the supply side, employers across the country tell us how attitude and character are vital, yet the education system isn't always producing or accounting for this. Employers consistently struggle to assess the value of non-academic qualifications, and young people who have struggled in traditional academic routes are too often invisible to hiring managers who have no framework for understanding what other achievements represent.
Better careers education can help young people understand what employers want and give young people the tools to project themselves beyond just GCSE grades. Evidence shows that careers education can reduce the likelihood of young people becoming NEET by up to 20 per cent in the best-performing schools, and schools need stronger incentives to put this at the heart of what they do, with Ofsted treating it accordingly.
On the demand side, the picture is equally uncomfortable. The cost of hiring a young person has risen dramatically in recent years. Employer National Insurance contributions have gone up, the minimum wage differential between young and adult workers has narrowed, and the Employment Rights Act has made employers more cautious about the flexible, entry-level roles that have historically been the first rung on the ladder for young people. You cannot put up the cost of hiring young people and then wonder why fewer of them are being hired, and the Government cannot present itself as serious about getting young people into work while the structural conditions push in the opposite direction.
The Youth Guarantee and the Connexions model that inspired it worked because they connected willing young people with willing employers in a labour market that was fundamentally open to them. That openness cannot be assumed today and restoring it will require making it genuinely viable for employers, particularly smaller ones, to take a chance on someone without experience. That means addressing the cost of employment directly, not recycling it through hiring incentives that reach only a fraction of those who need them.
Alan Milburn has given this government a clear account of what is happening. The task now is to act on it.
