A Better Future: Transforming jobs and skills for young people post pandemic

This concern is borne out in our findings, which suggest that regional disparities in access to jobs for young people have remained high during the pandemic. While London and the South East have seen the biggest growth in Universal Credit claims, overall levels of youth worklessness remain highest outside of those two regions.

In 34 local authorities, rates of out-of-work Universal Credit receipt among young people are one-and-a-half times higher than the national average.

Areas that have the highest levels include:

• Areas of high deprivation, including Hartlepool – which is double the national average, Burnley (88% above) and Wolverhampton (85%).
• Coastal towns with a reliance on tourism and hospitality, such as Blackpool, where Universal Credit receipt among young people is 85% higher than the national average Hastings, (81% above the national average) and Thanet (85% above).

While there was a dramatic, initial impact on youth employment from the pandemic with over 425,000 jobs lost one year into the pandemic, the challenge is now very different.

There has been a significant contraction in the size of the youth labour market, with unprecedented numbers of young people staying in or moving into full-time education.

We find that:

• Youth participation in full-time education has now risen to its highest rate on record (47%, compared with 43% before the crisis began), while the youth employment rate has fallen to close to its lowest ever (53%, compared with 55% before the crisis began).
• There are nearly 200,000 more young people in education and not looking for work than before the crisis began. This is contributing to employer difficulties in filling entrylevel jobs, especially where those roles are not being advertised flexibly (for example in ways that can fit around studies).

The headline picture of increased participation in education masks the widening of preexisting inequalities in the youth labour market:

• The pandemic has intensified the trend towards increased polarisation in the youth labour market between high- and low-skill jobs, leading to fewer ‘stepping stone’ midskill jobs and more young people in insecure and part-time work.
• Long-term unemployment among young people has risen, with 170,000 young people unemployed for more than six months, and those with a health condition, disability, young parents and most likely to be among this group.
• In our interim report for this programme, we found that falls in employment during the pandemic have widened the ethnicity employment rate gap from 22 percentage points to 26 points for Black people and to 25 points for Asian people. The fall in employment rates has been four times greater for young Black people than for young white people, while the fall for young Asian people has been nearly three times greater.

While climate change and loss of biodiversity poses an existential risk, the shift to green
jobs through investment in a net zero transition represents an opportunity to generate
‘future-proof’ jobs for young people, including those from disadvantaged groups.
We outline three trajectories for investment in the low carbon economy in the mediumterm following the pandemic.

We find that:

• Under a ‘green and social investment’ trajectory, assuming £30bn of additional climate and environmental investment annually together with £17bn investment in ‘low emission’ jobs in health and care services, an additional 1.6 million jobs could be created. This breaks down to a youth share of approximately 176,000. Jobs created are primarily in social care, low-carbon housing, sustainable transport, and health care, and result in significant job opportunities across the skills spectrum –
  including mid-skill jobs.
• These are broadly equally distributed across regions. In all regions, youth employment under this trajectory grows by between 4 and 5 per cent. This translates to, for example, approximately 19,000 jobs in the North West, 15,000 jobs in Yorkshire and the Humber, 14,000 jobs in the West and East Midlands, respectively and 18,000 jobs in London. The occupational groups with the most growth are: (1) skilled trades, (2) caring, leisure and other service occupations, and (3) professional occupations, which together make up about 80 per cent of job creation across regions.
• Opportunities for young people to transition from existing roles to ‘green’ roles include workers from the construction sector trades, such as home retrofitting and low-carbon heat, while receptionists and retail sales workers could move into customer service representative roles in green sectors to meet growing demand.

We compare these findings with two other trajectories: the continuation of pre-pandemic investment trends (assuming current levels of investment at about 3% of GDP) and a ‘middle way’ trajectory, which is a combination of these (assuming a £16bn annual increase in investment). Fewer jobs are created under the ‘middle way’ trajectory, with some mid-skill growth, while the ‘continued trends’ trajectory sees a decline in jobs and continued polarisation of the youth labour market with a loss of mid-skilled jobs.

The reforms introduced as part of the government’s Plan for Jobs since the Covid-19 pandemic began, such as the Kickstart scheme and Youth Hubs, were set up as an emergency response, and so far, there is no clear vision for their development over the medium or longer term. They were also established at a point when high levels of unemployment was viewed as the main risk for young people. Since then, however, the context has changed.

As we look ahead, our analysis suggests the key risks are the large decline in youth participation in the labour market, regional inequalities in access to jobs, and disadvantaged young people falling further behind their peers. Our survey with young people found that a lack of work experience and connections were the key barriers preventing young people from entering good jobs, as well as a lack of training. Difficulties travelling outside of their local area, and the competitive jobs market were raised as barriers to entering secure work.