Why we must ‘future proof’ young peoples jobs and skills to re-start generational progress

Generational progress in the UK is grinding to a halt. Those in their 20s and 30s today have incomes no higher than the previous generation at the same age and are in fact worse off once housing costs are considered. A new report from IPPR and the Institute for Employment Studies, commissioned by the Blagrave Trust and Youth Futures Foundation, argues that young people will only avoid the fate of poorer job prospects and lower lifetime earnings than previous generations, if policymakers grasp a once in a generation opportunity to address longstanding problems with the youth labour market.

At the start of the pandemic, there were widespread fears that youth unemployment would sky rocket. There has indeed been a significant impact, with employment rates for young people still more than six per cent below pre-crisis levels - a far larger gap than for any other age group. However, this has been offset by an unprecedented increase in young people in full-time education – which has now risen to its highest rate on record (48 per cent compared with 43 per cent before the crisis began). This is likely to be contributing to employer difficulties in filling entry-level jobs, especially where those roles are not being advertised in ways that can fit around studies.

Over the past year and a half the youth labour market has further polarised into high and low skill jobs - with fewer vital mid-skill ‘stepping stone’ jobs - and more young people working in part-time jobs when they would prefer full-time work. And while these impacts have been exacerbated by the crisis, they also reflect a longer-term trend towards fewer young people in work. Previous research from the Learning and Work Institute has shown that young people tend to be overrepresented in the sectors which are set for lower employment in the long term, and under-represented in those likely to see the strongest jobs growth in the coming years.

Meanwhile, inequalities in the youth labour market have remained high throughout the pandemic. IPPR analysis shows that rates of out-of-work Universal Credit receipt among young people vary hugely by region. Areas of high deprivation such as Burnley, Hartlepool and Wolverhampton have seen increases 80 per cent higher than the national average, as have coastal towns with a reliance on tourism and hospitality, such as Blackpool and Hastings. And a report from this project earlier this year - Unequal Crisis - showed that many of those who were most disadvantaged appear to have lost out more during this crisis – with Black, Asian and minority ethnic young people particularly hard hit.

All of this points to an overwhelming case for action. Young people interviewed as part of this research overwhelmingly want what previous generations wanted from work: secure, full-time jobs with decent pay (at the real living wage) near where they live. If required, and with the right support, they are willing to change career direction. Nonetheless, they worry that a lack of local jobs and inequalities in local areas could hold them back from achieving their aspirations.

In trying to improve this uncertain outlook, policymakers have several key opportunities in the months ahead. The Levelling Up strategy is a chance to ensure young people have more opportunities in their home towns, as well as in urban hubs, in order to help equalise post-16 outcomes. The report recommends ensuring a proportion of jobs created through any levelling up investments are available for young people through socially responsible procurement, including via ‘local labour’ clauses and ambitious apprenticeship creation targets. But Levelling up is also a chance to introduce radical reform of fragmented employment and skills systems at the local level. The report proposes building on the ‘Youth Hubs’ introduced during the pandemic to invite local authorities to bid for funding for ‘Universal Youth Support’ trailblazers. Reforms tested in these areas could bring together and localise existing support, widen the current Youth Offer to go beyond just those young people receiving Universal Credit and introduce greater flexibility within Universal Credit to allow young people to undertake training where this could help them find a good local job.

The government’s Net Zero agenda is another major opportunity to transform prospects for young people, including the most disadvantaged. IPPR analysis finds that under a ‘clean and green investment’ trajectory, with ambitious investment in the net zero transition in sectors such as low carbon housing, sustainable transport and ‘low emission’ jobs in health and care services, hundreds of thousands of jobs would be created across the skills spectrum - including vital mid-skill jobs - that would be equally distributed across regions of the UK. For disadvantaged young people to benefit, investment needs to be linked to early development of skills pipelines, and reform and expansion of the government’s Kickstart scheme and apprenticeships policy are proposed to achieve this, among other measures.

The pandemic has had a seismic impact on young people’s education and employment. However, it is important to look beyond its immediate aftermath and consider how well equipped young people now are to face the future. Through its most transformative policy agendas, government has an opportunity to build on the reforms introduced in the pandemic and ‘future proof’ young peoples jobs and skills post-pandemic: this report urges it to do so.

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The full report, A better future: Transforming jobs and skills for young people post pandemic is published by the Institute for Employment Studies here.