What is to be done to avoid a meltdown of the youth labour market?

I’ve been writing and speaking a lot over recent weeks about a potential meltdown of the youth labour market that I see coming. At the start of the month I described the situation as a ticking timebomb and I’ve seen nothing to change my opinion since. In fact all of the data that has been emerging (and have a look at the ISE bulletins if you want a summary) tells me that the chance of recession is increasing and the labour market is deteriorating. Hopefully we are now at the peak of the health crisis, but government still has no clear plans in place for reconstruction post-Covid-19.

Young people are therefore hurtling off of a cliff edge as they approach the end of their courses with the labour market looking increasingly challenging. However, now is not the time for despair. Recent weeks has shown that the government is capable of stepping in and averting a labour market catastrophe when it is needed. We need to argue that this is needed for young people at the moment. But, we also need to have some clear and sharp demands about what government needs to do. In the following table I try and set out five areas that could form the basis of an emergency youth employment plan. I also try and explain what the respective role of government and non-governmental actors is with respect to each of these.

InterventionDescription and rationalGovernment’s roleNon-governmental actors’ role
Increase access to career guidanceYoung people are going to be facing a complex and rapidly changing labour market. They will need help in understanding this and responding to it.Government needs to provide emergency funding to the existing channels through which career guidance is delivered (Careers & Enterprise Company, National Careers Service and college and university careers services). It also needs to promote a national entitlement to support to young people.Career guidance providers need to quickly establish how they could scale up their services and plug gaps in the availability of career guidance.
Improve brokerage between education and employment and co-ordination of the labour marketOne of the key challenges that young people are facing is transition between education and employment. There needs to be support to bring these worlds together and to manage the process of transition in a clearer way.Alongside funding for career guidance the government needs to provide funding to support brokerage and co-ordination of information about opportunities that do exist in the labour market. LEPs and other local bodies are likely to be critical to this.There is currently no shortage of local and national government programmes, NGOs and careers tech companies offering forms of brokerage and co-ordination. These organisations need to try and come together and define where new government funding could be injected to transform the patchwork into a system.
Stimulate the uptake of trainingIt would be good if a greater number of people remained within the educational system this year, developing their skills, rather than entering the labour market at the point of crisis. Government needs to look at the funding and access arrangements for further and higher education (including postgraduate study) and explore what can be done to increase the proportion of young people who progress their education and thereby sidestep the challenges of entering the labour market this year. Learning providers need to do their best to get provision up and running for the autumn and communicate realistic estimations of their capacity to take new and additional students in the autumn.
Incentivise entry level employmentMany employers are going to turn down their entry-level recruitment this year. Government should offer them incentives not to do this.There are a range of options for how this could be done, but essentially they all boil down to giving employers money to recruit young people. Employers should avoid panic and try and maintain their recruitment as much as possible. If everyone cuts and runs the economy will go into recession. If people hold firm, the recession may not be as long or as deep.
Create internships (intermediate labour markets)At the moment we are not sure how big or long-term the problem is going to be. By creating short-term (six month or a year) internships we postpone some of the problem and give ourselves time to think about what to do.Government should create a series of ‘Reconstruction internships’ for young people leaving the educational system to make a positive contribution to the nation. Government should also give tax breaks to other organisations that do the same.Employers, NGOs and other bodies should also look at creating new short term roles to help them to manage the reconstruction of their business.

These ideas are just a starter for ten. Lots of other people and organisations have already started thinking about this kind of thing. I hope that this list might be simple and clear and give us the basis for some kind of short term response to the critical issues that are about to appear in the youth labour market.



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