Long-term strategy and collaboration are key to addressing youth unemployment

Young people have felt the economic impact of the pandemic more than any other group, with concerning data on the levels of youth unemployment caused by the pandemic. At the same time, some sectors are already reporting difficulties in hiring as we leave lockdown. Addressing both these problems can only be achieved through a holistic, long-term skills, employment and immigration strategy as well as collaboration between policy-makers, employers and education providers.

In  NCUB’s response  to the House of Lords Select Committee on Youth Unemployment, we argue that as well as additional support for young people in the immediate term, we need a long-term plan to equip young people with the skills they need to thrive in the labour market.

The latest ONS labour market statistics pointed to a concerning picture for young people (16-25 year olds). Payrolled employment for this cohort has fallen to 3.43 million, a record low, and long-term unemployment for them has hit a five-year high. The youth unemployment figure would have been much worse if not for a large increase in the amount of young people in education and potentially due to the fall in foreign workers.

Since the start of the pandemic, there has been a large decrease in immigration and an increase in the amount of foreign workers who have returned to their country of origin. There were 125,173 work-related visas granted in 2020 (including dependents), 35% fewer than in 2019. Considering that in 2019, EU citizens did not need work visas, this is a large drop in numbers.

Though the exact figure is unclear, the numbers of foreign-born workers in the UK has certainly decreased in 2020. The ONS found that the number of non-UK citizens employed   in the last quarter of 2020, either decreased by 4% when looking at companies’ payrolls or decreased by 15.4% according to the Labour Force Survey (LFS). Despite the huge variance in this data, it’s clear that there has been large drops in immigration and in the percentage of non-UK born workers.

With coronavirus coinciding with the first months of Brexit, it is very difficult to know if very low levels of immigration are here to stay. Without a low-skilled immigration route, sectors that have traditionally hired large amounts of migrants such as hospitality, retail, construction, logistics, agriculture and social care will need to hire more UK citizens. As we exit lockdown, companies in these sectors will need to hire quickly, yet those in the hospitality sector are already reporting recruitment difficulties.

It’s not just sectors that are considered ‘low skilled’ that are struggling to hire. There have been perennial skills shortages in the technology and engineering sectors for many years. The cost of not finding suitable workers is a drop in productivity and in economic growth.

This underlines that the UK’s skills challenge is not just how to recover youth employment following the pandemic. It is about building a suitable workforce for the future.

There are some sectors that have an abundance of suitable candidates. There are a reported 28 law graduates to a single legal sector vacancy, yet the solution cannot be a cap on applications. There should not be any limits placed on the ambitions of young people, education is the route to achieving social mobility and we cannot deny opportunities to those who seek it.

Given the current landscape, it’s not beyond the realm of possibility that we will see well-qualified young people seeking new career paths in areas of importance in the post-pandemic labour market.

Increasingly, we have a gap between the aspirations of young people and the vacancies that employers require. Addressing this mismatch cannot be achieved overnight but requires policy-makers, employers and education providers to work together. It requires strategic thinking about the UK’s labour market needs are and how our skills, employment and immigration policy can meet those in the short, medium and long term.

NCUB is calling for one central non-departmental government body to make evidence-based recommendations across central and devolved government in these policy areas. This would build on and merge the Department for Education’s Skills Advisory Board, the Office for Talent and replace the UK Commission for Employment and Skills as well as working closely with the Migration Advisory Committee. Engaging with businesses and universities should be central to this body’s mission.

Overcoming this skills mismatch is vital. It can only be achieved with collaboration and strategic direction. Without suitable workers, UK businesses will struggle to adapt and thrive. Without suitable opportunities, young people will also struggle to fulfill their potential.