A new local social contract to tackle Youth Unemployment


The effects of youth unemployment are not an isolated temporary moment in the lives of young people. That is why we must push for a much stronger approach now

Since the end of 1970’s, youth unemployment has been a serious problem.  It is now a crisis.  In the UK, nearly a million young people aged between 16-24 are currently unemployed.  This enormous challenge of a potentially ‘lost generation’ requires a significant policy change.  This change cannot rely on another round of well meaning, but disparate youth employment schemes.  These have been tried and youth unemployment has remained stubbornly high.  Instead we need a much deeper and systemic approach – an approach which builds a local social contract for youth unemployment.

This local social contract is required because the challenge of having vast numbers of young people unemployed is deeply pernicious.  We know from significant research work, notably by Danny Blanchflower and David Bell, that the effects of youth unemployment are not an isolated temporary moment in the lives of young people.  A bout of unemployment can ‘scar’ a young person’s, long term prospects by damaging confidence and skills, which are needed to secure work and can perpetuate a self-reinforcing cycle.  Longer term periods of being unemployed can entrench issues and thus limit the young person’s ability to achieve their potential.  This serves to reduce their own lifetime earnings and, in aggregate economic terms, reduce productivity.  Furthermore, youth unemployment is costing the Government (and us all) in welfare payments.

The present outlook for growth is sluggish but we can be optimistic.  However, even if the positive predictions for UK growth are realised, youth unemployment will have ongoing repercussions and remain a long running catastrophe.  That is why we must push for a much stronger approach now.

In looking at ways in which the problems of youth unemployment can be tackled, the common approach to the labour market, since the 1980’s, and a feature of the present UK government’s approach, is essentially liberal.  In this, the belief is that labour market should be free from regulation.  Therefore we have had a succession of schemes which have championed education, training and skills and offerings and incentives to employers to recruit young people. This piecemeal and fragmentation of initiatives has been largely inconsistent with any actual reductions in youth unemployment.

The UK’s Youth Contract, introduced in 2011, is typical.  It offers a series of tailored supply side support designed to make young people more appealing to employers, via apprenticeships and wage subsidies.  However, what is sorely missing from the youth contract, is something more strategic, which attempts to both raise the activities within and quality of the labour market.  The youth contract, does nothing to influence the type of job or range of jobs on offer.  Similarly, whilst Labour’s proposed ‘real jobs guarantee’ for the young unemployed offers something broader than the Youth Contract, it is in danger of merely subsidising pre-existing poor work.  High end training and decent long term employment, activities which burrow deep into the labour market are needed, if we are to address the deep pernicious effects of youth unemployment.

In this the geographical scale of initiative is of vital importance.  Recent work by the Work Foundation has detailed the significant geographical variation of youth unemployment across the UK.  They found that youth unemployment is far from uniform.  As such, whilst national standards are required, we must place greater focus on bespoke local activity, which reflect the distinct causes of unemployment, young people’s education and training expectations, employer characteristics and the wider health of the economy.

This ‘local’ dimension enables specialised need to be identified and tailored solutions to be developed.  Local approaches which are tied to needs of the local labour market have better outcomes; local services are best to identify local disengaged young people and small scale and bespoke interventions have a better impact.

Local government has a vitally important role to play in this.  However as found in research conducted by my own organisation, the ability of Local Government, to influence the youth unemployment agenda is limited.  Local Government, too often remains peripheral within a central government and private sector dominated model of youth unemployment service delivery.

In thinking through what a comprehensive local social contract would look like, it is evident that we need something which not only focuses on employer incentives, but hones in on connections across young people, public policy, local government and employers. This would seek to tackle the bigger prize – improve the activities within and quality of the labour market for young people.  In this a local social contract for youth unemployment would include:

•    National coordination – The issue of youth unemployment needs to percolate through a range of government activity.  In this they would need to be a golden thread of activity and across departments – driving up labour market standards.  This would include a stipulation that all local economic plans (including work by the local bodies tasked with local economic development- Local Enterprise Partnerships), to make youth unemployment a priority.

•    Statutory duty on Local Authorities to create a local strategy and plan designed to tackle youth unemployment – As recommended by recent work by the Work Foundation.  This would mean that all local economic development plans, would need to ensure that they were seeking to influence employment and the wider labour market to make due consideration to young people and youth unemployment.

•    Flexibility in national welfare system – Local authorities, city regions and Combined Authorities, should be afforded flexibilities, from central government departments tasked with Welfare (in UK this is the Department for Work and Pensions).  This would enable local government to flex the benefit system, increase the range of incentives and thus stimulate labour market development, within the local contexts in which they sit.

•    A ‘youth resolution’ – As indicated in the excellent report by the University College Union and University of Huddersfield, local areas should adopt a local ‘youth resolution’, in which public, social and private organisations providing education and training, guidance and support and crucially employers, sign up to an agreement, backed by national government.  This agreement would mean all players ‘commit to certain material and ethical standards when working with young people’.  This would include levels of fair pay, an offer of structured training opportunities, career progression routes, access to workplace mentors and programmes of personal development and enrichment activities.

•    Work with public sector employers – Public sector ‘anchor’ employers, including universities, local government and other public bodies should set policies which advance the above ‘youth resolution’ and seek to influence their own private sector supply chains as regards developing a youth focussed local labour market.

Focusing on subsiding employers or improving training and education are no longer enough.  The problem of youth unemployment has been going on too long and is now too deep.  A significant change is required which puts youth unemployment higher up the agenda and drives up the quality and activities within local labour markets.  We need a local social contract for youth unemployment.

The original article can be read on the Policy Network website here