Youth Transitions / A function of how economic, education and employment policies interact

“Youth unemployment was rising since well before the current economic downturn, but the fallout from the financial crisis has brought it to the top of the government’s agenda and generated a plethora of publications and initiatives to tackle the problem.” write Tess Lanning and Katerina Rudiger in Youth unemployment in Europe: lessons for the UK (Adapted chosen excerpts by Job Market Monitor to follow).

Traditionally, concern about youth unemployment in the UK has centred on the skills deficiencies and lack of work ethic among young people, and on the failure of the education system to produce ‘job-ready’ young workers.

Record high youth unemployment following the global financial crisis has shifted this debate to some extent, with increasing recognition that young people, and particularly those who do not go to university, face a tough job market and a lack of support during the transition from school to work. Headline-grabbing increases since the recession also mask deeper, structural problems that have seen young people’s transitions from school to work become longer and riskier since the 1980s, partly due to an increasing reluctance on the part of employers to hire young people, as well as a change in the types of jobs available to young people. Despite this, there is little consensus on the reforms required to better support young people into work and responsible adulthood, or on how to engage more employers in developing the next generation of skilled workers.

The paper explores these issues, highlighting fresh insights and ideas from the
youth unemployment debate and policy developments in other European countries. It draws on a learning trip to Brussels, where a small delegation from the Institute for Public Policy Research (IPPR), the Chartered Institute for Personnel and Development (CIPD) and the Trades Union Congress (TUC) met key European stakeholders, politicians and country experts to explore the different debates, policy approaches and ideas for tackling youth unemployment across the continent. It also draws on wider research where relevant.

In the UK, it is often suggested that young people find it harder to compete with older and more experienced workers in more highly regulated labour markets such as France and Spain, where existing and full time employees (insiders) have strong employment contracts but new entrants and disadvantaged workers (outsiders) struggle to secure permanent work, or to find work at all. The theory is that high employment protection legislation acts as a disincentive for employers to hire new workers. This disproportionately affects young people and other new entrants to the labour market, whose employment prospects depend heavily on expanding recruitment. In the UK, some parts of the business lobby have argued that lower levels of employment protection would create jobs, However the UK is one of the most lightly regulated markets in the OECD and many countries with lower rates of youth unemployment have stronger employment protection. This suggests that further deregulation, as proposed by the recent Beecroft Review, is unlikely to have a significant impact on the employment prospects of young people. It is also frequently suggested that young people in the UK are relatively low skilled when compared to their contemporaries elsewhere. The UK has lower levels of ‘technical’ or intermediate skills, but it performs relatively well on higher education. In fact, the supply of graduates outstrips the number of graduate jobs in the UK, and as a result many employers are able to recruit graduates for jobs that in the past would not have required a degree (in the process potentially squeezing out lower skilled young people from lower skilled jobs).

Furthermore, the position of young people, and particularly young men, relative to adult workers in the UK has worsened in recent decades (see graph below), despite the fact that young people today are more highly qualified than their parents or grandparents. In the 1970s, most young people in the UK left school at 16 and moved relatively quickly into work. By the 1990s it took the average young person six years to find stable employment after leaving school, even though the average school leaving age had risen.

The UK’s approach to tackling youth unemployment can be characterised as light touch labour market regulation and state investment in education. Compared to other northern European countries, however, young people in the UK are largely left to navigate the transition to work and responsible adulthood alone, and the support they receive varies wildly across different families, communities and employers. In contrast, the northern European countries with relatively low rates of youth unemployment are characterised by strong ‘transition systems’, in particular high quality vocational education and training.

The relative ease or difficulty of young people’s transitions into work should be seen as a function of how economic, education and employment policies interact. As one European official noted, ‘the strength is in the system … It is not only about knowing what kind of training needs to be provided; the issue is how [the system] is put into place’. Understanding the deep-rooted nature of these systems explains why a ‘best practice’ initiative in one country may fail to have an impact in another, but it may also lead to a sense that we are stuck with the system we have. In France, for example, recent impressive increases in the quantity of apprenticeships occurred after the Sarkozy government increased a quota on all large employers to employ three per cent of their employees as apprentices to five per cent. This offers an example of a policy tool that seems less likely to work in the UK context, where the legitimacy of state intervention in the economy has been more limited, particularly since the 1980s. UK policymakers see their role as to provide the external conditions for companies to succeed, rather than intervening into how they go about doing so.

Can the UK learn lessons from other European countries?

Key lesson from countries with low rates of youth unemployment is the need to develop strong transition systems, including high quality initial vocational education and training that opens up real opportunities in the labour market, namely:

1. Improve the quality and status of vocational education and training

2. Engage more employers to recruit, train and offer work experience to young people

3. Prevent the ‘scarring’ effect of long term unemployment.

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