Do scary stats mask real youth unemployment problem?

Saying that 1 in 5 young people are out of work is misleading - and could distort Government policy, says the CIPD.

by Emma Haslett
Last Updated: 06 Nov 2012
We've heard a lot lately about the ‘the lost generation’ – the 16-to-24 year-olds struggling with a ‘toxic’ combination of a lack of jobs and cuts to education spending. But according to the Chartered Institute of Personnel and Development, the youth unemployment level isn’t quite as bad as the official statistics would have us believe. Furthermore, it argues that this kind of rhetoric is both inflammatory and over-simplistic, and could mask the real problem: that the underlying issue is not going away...

According to the CIPD, the Office for National Statistics’ assertion that one in five 16-24-year-olds are out of work is an exaggeration: apparently, the true figure is more like one in eight. The reason for the discrepancy is that the official figures include those who are in education but looking for work. So a big chunk of this total is full-time students on the hunt for a casual bar job to fund their drinking habits - and they're being lumped in with the frustrated graduates who have spent months (maybe years) searching for gainful employment.

In fact, says the CIPD, the employment figures aren’t actually much worse than they were during the recession in 1992 - it's just that there are far more people in education now (36%, compared with 25% then). And as the CIPD's chief economic adviser Dr John Philpott points out, youth unemployment tends to rise sharply during the downturn but dropping off fast during the subsequent recovery. So the theory is that once recovery begins in earnest, youth unemployment should start falling again.

The problem is, the CIPD reckons, that these scary headline figures encourage the Government to use broad-brush measures rather than focusing on the specific problem - i.e. the underlying youth unemployment rate, which has been stuck at around 9-10% for years now and is unlikely to improve if/ when the economy perks up. Philpott reckons this suggests either a skills problem - hence the need for faster progress on vocational training - or that the cost of employment has got too high, in which case a review of the minimum wage or national insurance contributions may be necessary.

We suspect it may well be a bit of both (and it's hard to disentangle the two). But clearly we have a skills gap in our education system: a new report by Demos and the Private Equity Foundation suggests that schools are not providing appropriate teaching for the 'forgotten half' of students who don't go on to higher education. If that's true, it's no wonder that we're failing to solve the underlying problem here.

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