Fair enough on youth unemployment

This year alone, high youth unemployment will cost government £4.8bn in lost tax revenues and unemployment benefits, more than the budget for further education for 16 to 19 year-olds, and cost the economy £10.7bn in lost output, the report said.

The National Institute of Economic and Social Research (NIESR), which contributed to the report, said young people out of work now were at risk of never finding jobs.

Jonathan Portes, director of NIESR, said: \”Not only is youth unemployment costing us billions now, but the damage done to the future employment and earnings prospects of those affected will cost us billions for years to come, every year, long after the economy as a whole has recovered.

OK, so, the cause of all of this? No, it ain\’t just the recession:

There is no one cause: 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.\”

Structural, see? So we\’ve something wrong in the underlying system, not just the effects of slow growth or recession. So, what is it in that underlying system which is wrong?

ACEVO called for the Government to \”up its game\” and give employers more incentives to hire the under-25s.

OK, we know how to do that. Cut the minimum wage for under 25s.

Young people also need better preparation and motivation for work, the report said. \”Too many young people do not have the hard and soft skills they need to progress in education or work,\” the report said.

And the education system is fucked.

So, cut the minimum wage and change the education system. The Government is already doing the latter so I assume we\’re all on board to fight for the former, yes?

What do we want? Cuts! Cuts! Cuts!

When do we want them? Now! Now! Now!

13 thoughts on “Fair enough on youth unemployment”

  1. Isn’t the youth minimum wage effectively already being cut though, smaller increase than adult rate last year (1% to 2.5%) Both are being cut in real terms since inflation is almost 4%

  2. But it is the cost to business of the youth minimum wage, not how much it is able to buy that is important here. It is still rising faster than private sector wages.

  3. But if the disparity between the adult rate and youth rate is widening (£1.10 an hour difference), then would this not provide some incentive for businesses to employ more youths?

  4. Only if the youths are equally skilled as the older unemployed and relatively as well skilled as those currently employed.

    Look at it this way – if I have the opportunity to take on extra work, I can employ a yoof, an older person or pay some overtime (well, I can also not pay overtime but …) The first two have (possibly different) deadweight costs. In times of uncertainty and with the recent increase in rights of temp labour, exploiting the existing workers a bit more is easy to rationalise.

    As they’re probably feeling the pinch themselves, they may even be grateful.

  5. Would this work?

    Abolish national insurance for those born after 1986 and tell them they are on their own with regards pensions.

  6. How far do we cut youth minimum wage though before we disincentivise these young people from even wanting to work?

    I know there was a study (in Canada I think?) which basically showed a minimum wage above 50% of the median wage for particular age groups had a significant effect on unemployment. So bearing in mind the current NMW rates in the UK are £3.68 per hour for 16-17 year olds and £4.98 per hour for 18-21 year olds, then this would mean decreasing these to £2.40 per hour (or less) and £3.80 per hour (or less) respectively.

    Who the hell would want to work for that?

  7. Who the hell would want to work for that?

    Preaching to the choir but: loads of people who aren’t entitled to UK benefits. Even at your lowest figure, that’s $6900. So somewhere between the per-capita GDP of Egypt and Ukraine.

  8. Makes me hark after the Thatcher years

    Tim, would you please get a theme where the ‘cite’ tag works so we can reliably snigger in the appropriate direction?

    Dear Andrew,

    In 1979 the British economy was fucked. In the arse. Backwards and repeatedly. But we didn’t have full employment then. Somewhat later, there was enough money there for us almost to survive “we have abolished ‘boom and bust'”.

    If Gordon Brown ends up a less immediately despised figure than Neville Chamberlain, then he’s escaped the righteous wrath of reality.

  9. @Tim ‘So we’ve something wrong in the underlying system’

    Radio 4 Today prog day before yesterday had David Miliband on with John Humphrys.

    Miliband was talking about (what he admitted was) the long term problem of youth unemployment. It had been bad in his days in office, he conceded, but was worse now because of the actions or inactions of the current government.

    Humphrys raised what he called the ‘Pret a Manger’ problem, by which he meant that you cannot buy a sandwich in Pret from a British server; they are all Polish, Nigerian or Iraqi.

    Thus, he suggested, wasn’t immigration something to do with it?

    Miliband said this was clearly not the case, because there was a long term youth unemployment problem in his constituency and next to no unemployment, no-one sane wishing to emigrate to South Shields.

    Humphrys moved on.

    The question neither seemed to address was what it is about this country and our ‘young people’ and the ‘young people’ of other countries that means kids will move from Africa to work in one of the several Newcastle Pret, but Miliband’s constituents won’t get on the bus and travel in from South Shields to do the same job.

    It is all as much a problem of morality as anything.

  10. Ooops – Miliband said this was clearly not the case, because there was a long term youth unemployment problem in his constituency and next to no ‘immigration’

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