Home Publications A persistent challenge: NEET projections for the UK to 2036 under alternative economic scenarios

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Authors

Abigail Coxon, Principal Economist and Arushi Bhasin, Senior Economist, Youth Futures Foundation

Overview

The scale and persistence of the youth employment challenge an important question for government, employers and organisations supporting young people to answer.

To help generate forward-looking analysis that supports more effective decision making, we have conducted statistical forecasting.

In this report, we explore how the number of young people not in education, employment and training (NEET) could evolve under different economic conditions by 2036.

The resulting projections are conditional and illustrate what could happen under different circumstances, giving policymakers a clearer sense of the challenge they are planning for.

Methodology

Read more about Methodology

The forecasting model takes three main types of inputs to create its projections:

  1. Historical NEET patterns from the Office for National Statistics, which allow the model to capture persistence and seasonal patterns in NEET.
  2. Explanatory variables, including real GDP growth, the UK unemployment rate, vacancy levels and selected structural indicators, which capture relationships between economic and labour-market conditions and NEET.
  3. Future economic assumptions, supplied externally to the model, which determine the economic conditions under each scenario.

How to use

The model is best viewed as a scenario and planning tool. It provides an indication of how the scale of the NEET population could vary under different economic circumstances and can provide a baseline for policy analysis, including by allowing separately estimated policy impacts to be considered alongside different economic scenarios.

The resulting NEET projections should not be interpreted as unconditional forecasts of what will happen in the future, since different economic conditions would result in different NEET projections.

Key insights

  • NEET numbers are projected to stay high in every scenario. By the end of 2036, around 1.07 million young people are projected to be NEET under the central scenario. That compares with 1.01 million under the optimistic scenario and 1.11 million under the pessimistic scenario. All three are above today’s level.
  • A stronger economy helps, but only partly. The gap between the optimistic and pessimistic scenarios is around 95,000 young people. That is a substantial number of people but shows that the NEET challenge extends beyond the wider economic cycle.
  • A severe downturn could push NEET numbers to the highest levels on record. If unemployment rose to and stayed at its 2011 peak of 8.6%, with weaker GDP growth, around 1.33 million young people could be NEET. That would be about 261,000 more than the central projection and 347,000 more than today.
  • Even very favourable conditions leave around a million young people NEET. Under the most optimistic stress test, the projection sits just under one million, well above the lowest levels seen historically.

Recommendations

Support should respond to economic conditions

Read more about Support should respond to economic conditions

A weaker economy is associated with more young people being NEET. When labour market demand is low, support may need to do two things: help young people compete for the jobs available and increase the number of opportunities open to them.

The NEET challenge goes beyond the economic cycle

Read more about The NEET challenge goes beyond the economic cycle

Around a million young people are projected to be NEET even in the optimistic scenario. This points to structural factors such as health, skills and education, access to opportunities and the effectiveness of employment support. That is consistent with Resolution Foundation analysis, which links much of the post-2019 rise to inactivity due to ill health or disability. Economic recovery alone is unlikely to reverse the recent increase.

Youth employment policy needs to be resilient to downturns

Read more about Youth employment policy needs to be resilient to downturns

The stress test shows how much higher NEET numbers could climb in a severe recession. Keeping enough capacity in youth employment support would allow it to be scaled up quickly when conditions worsen.

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