This country cannot afford a lost generation

2nd October 2009 at 01:00
Comment: Mark Corney

Alarmingly, the last monthly unemployment figures showed that 34 per cent of 16 and 17-year-olds are unemployed, the highest rate of any age group, with 216,000 looking for work.

Confusingly, though, the latest quarterly figures for 16 and 17-year-olds "not in employment, education or training" (Neets) in June 2009 showed only 9.6 per cent in this so-called Neet category, with some 123,000 without a job or an education or training place.

Understanding both sets of figures is critical to ensuring the right policy conclusions are made. I believe the focus should be on 16 and 17- year-olds who are unemployed Neets.

It is important to remember that the headline unemployment figure refers to the UK rather than England. There are also two measures of unemployment. The first is the claimant count, which measures people looking for work and claiming benefit. The second is the International Labour Organization (ILO) measure, which counts people who looked for work in the past four weeks and are ready to start work in the next two. Since 16 and 17-year-olds, generally speaking, cannot claim jobseeker's allowance, the ILO measure is used.

Labour economists divide the population between the economically active - made-up of the employed and the ILO unemployed - and the economically inactive. The ILO unemployment rate is defined as the number of ILO unemployed as a proportion of the economically active.

The ILO unemployment rate for 16 and 17-year-olds is high because the economically inactive are excluded and because full-time students looking for work are included. In England, about 185,000 16 and 17-year-olds are ILO unemployed. But about 95,000 16 and 17-year-olds in England are full- time students and so are classed as technically unemployed.

And so attention rightly returns to the Neet category. Crucially, the Neet rate refers to England. It is measured as a proportion of the entire cohort of 16 and 17-year-olds, including both the economically active and the economically inactive. This is why the Neet rate is lower than the unemployment rate.

But educationalists should split the Neet category between those who are ILO unemployed and those who are economically inactive. Roughly two-thirds of the 9.5 per cent of 16 and 17-year-olds who were Neets in June were unemployed (82,000). As the recession causes employers to cut back on jobs with no or poor training, the Neet rate is being swelled by unemployed 16 and 17-year-olds.

The extra 72,500 places for 16 and 17-year-olds could increase participation in recognised education and training to around 90 per cent. Much more, however, still needs to be done to encourage unemployed 16 and 17-year-olds into education and training.

Offering a higher rate of means-tested Education Maintenance Allowances at 17 compared with 16 could encourage more 17-year-olds to stay on in full- time education. Offering wage subsidies to small firms to support employer-based apprenticeships might also stem the decline in apprenticeships for this age group.

But for unemployed 16 and 17-year-olds who have had enough of full-time education and who cannot get an employer-based apprenticeship, the answer might be college-based apprenticeships.

  • Mark Corney, Director, MC Consultancy.

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