Wasted youth
Civitas, 18 February 2011
The announcement that unemployment levels have risen further at the end of last year is unwelcome but no surprise. There are an extra 44,000 out of work, creating an unimpressive total of 2.5 million. What should really set alarm bells ringing is not so much the volume of unemployed, but just who these people are – most are young, piling out of schools or uni’s but with nowhere to work and the employment Catch-22 mounting. This is bad, but what really makes it unacceptable is that while we wallow, other countries, such as Germany, steam ahead. What’s the way out?
Youth unemployment is rising. Their numbers swelled in the last three months of 2010 by 66,000 to a total of 965,000 and now one in five is unemployed.. Having had no experience makes finding a job extremely hard. Sure, no one likes being out of work, but having a CV provides better chances than no CV at all. The graph below shows the numbers of young people out of work for over 2 years, a frightening trend that has now risen to 75,000.
Angry young people are likely to become the biggest thorn in the side of the Government. The Tunisian uprisings can be boiled down to the frustration of out of work men. While such anger is unlikely in the UK, it’s clear to all that long-term unemployment at an early age is hugely demoralising.
Our position is put in perspective by Germany. Unemployment is at an 18 year low, with 7.4% out of work. Importantly however, this fall is universal and the poorer and traditionally worse off East German regions are doing well. As a whole, the German economy grew by 3.6% in 2010. With only Japan bettering it, the nation has the second lowest unemployment in the G7. What’s the secret to its success? Fostering an environment in which businesses can grow.
The Government has waxed lyrical about sorting this mess out. Chris Grayling, the Minister for Employment said in response to the rise, ‘we’ll provide more support for young people struggling to get jobs’. Welfare benefits and training schemes are all well and good, but this is just relieving symptoms, not problems.
There is a need to look at the demand rather than supply side of unemployment. The demand for younger workers is not just about a lack of skills and experience, although undoubtedly this plays a large role. The issue is compounded by the mountain of regulations employers must wade through.
New employment laws are estimated to cost businesses an extra £23 billion over the next four years, in addition to the billions already spent on complying with existing ones. This money has to come from somewhere and this somewhere is likely to be the same pot of money used for jobs. Especially for SMEs, a cruel situation is being created where employment regulations will actually prevent employment from occurring in the first place, undermining their entire raison d’etre.
Given how bad unemployment already is, it is about time the Government stands back and realises its future plans will undermine the situation further, time bomb style. Scrapping the incoming regulation will relieve businesses of a big burden and allow them to grow. In turn, as hiring increases, this will reduce unemployment and just as a rising tide lifts all boats, so too will youth unemployment subside.