Contribution to EIRO thematic feature on Youth and work - case of the UK

(b) Policies and programmes

Reducing long-term youth unemployment was one of the Labour Party’s five pledges underpinning their successful 1997 General Election campaign.  The New Deal for Young People (along with a series of later New Deals - now nine in all) has been the flagship programme designed to fulfil this pledge. The first of the New Deals was rolled out nationally in April 1998 following a four-month trial period in twelve ‘Pathfinder’ areas. Funded from a windfall tax on utilities, it aimed to help young unemployed people into jobs and increase their long-term employability thereby making a positive contribution to sustainable levels of employment (Employment Service, 1998). The target group is 18-24 year olds who have been claiming unemployment benefits for six months or more, plus others in the same group with shorter unemployment spells who are deemed special cases worthy of earlier assistance. Participation in the programme is compulsory for the target group, in the sense that failure to participate results in benefit sanctions.

There are 3 stages to the New Deal for Young People (NDYP). Firstly, in the Gateway, which lasts for up to 4 months, each participant is assigned a Personal Adviser who will work with them on an assessment of which jobs they are best placed to get, and the best path back to employment. One of the changes introduced to the NDYP in the past four years is the Gateway course- a two week course, usually early on in the Gateway, covering ‘soft skills’, like time-keeping, the ability to work as part of a team and other basic skills employers say are essential. PAs also assess whether participants have extra or special needs, and offer participants continuing advice, guidance and help with their job search, which is supposed to be more intensive during the Gateway - the aim is to get each participant into an unsubsidised job at this stage, if at all possible. PAs help prepare those who do not get jobs for the next stage. In the second (Option) stage participants choose one of four Options: a subsidised job; full-time education or training; work experience in the Environmental Task Force or work experience in the voluntary sector. The full-time education and training option can last for up to 12 months, the others for up to 6 months. All the options include a training element - firms receiving the £60 weekly subsidy for the employment option and organisations providing the work experience options must provide one day a week of training, normally to NVQ 2 standard. Finally, for those who have not got jobs by the end of the option stage, there is the Follow-through, in which the participant gets the same mix of advice, support and help with job search from her/his PA as during the Gateway.

In 17 'tailored pathway' pilots the Government is assessing the advantages of greater flexibility than the highly structured system described above. In the pilots a work experience option can be followed immediately by a subsidised employment, or up to 12 months can be spent in a series of modules. The training and education option is normally limited to a maximum of 40 days.

There have been evaluations of NDYP’s impact on youth unemployment and employment by the National Institute for Economic and Social Research and the Policy Studies Institute (summarised in Findings from the Macro Evaluation of the New Deal for Young People, Michael White and Rebecca Riley, DWP Research report 168, 2002; http://www.dwp.gov.uk/asd/asd5/rport168/Inside.pdf).

According to their findings the impact on youth unemployment has been positive:

• NDYP reduced long-term youth unemployment by 45,000.

• In 2000, long-term youth unemployment would have been twice as high without NDYP.

• Total youth unemployment was reduced by less than this, because there had been some increase in short-term unemployment among people who did not get jobs after participating in the programme, and returned to JSA. As a result of NDYP, total youth unemployment was reduced by 35,000 (according to the NIESR evaluation) or 37 - 39,000 (according to the PSI evaluation).

• In the programme’s first two years 100,000 young people each year left unemployment earlier than they would have done otherwise.

• As with many active labour market programmes, NDYP’s impact tails off over time. Claimant count unemployment was reduced by 39,000 when measured at 6 months after the NDYP, 27,000 when measured after 12 months, and 12,000 when measured after 18 months NDYP has also had a positive impact in terms of more employment for participants, raising total youth employment by either 15,000 (NIESR) or 40,000 (PSI). And there have been important gains for the economy as a whole:

• National income is about £500 million a year higher as a result of NDYP.

• Lower benefit payments and higher tax revenues attributable to NDYP are worth about £3 for every £5 spent, reducing the programme’s net cost to £150 million a year.

Another study by McVicar, D. & Podivinsky, J. (April 2003) found that there were strong positive NDYP effects on all types of exit from unemployment - to employment, to education and training and to other destinations, although effects varied considerably from region to region. However, in most regions, the primary effect of NDYP has been to shift young people into education and training rather than into employment. (www.qub.ac.uk/nierc/).

The New Deal has also been quite popular with young people. A survey of 6,000 participants (National Survey of Participants, A Bryson, G Knight and M White, PSI, ES report ESR44, March 2000) found that nearly two thirds believed that the New Deal was very or fairly useful, and nearly half were completely or very satisfied with their PAs. However, people from disadvantaged groups were least satisfied.

The Trades Union Congress (TUC) has been a strong supporter of the New Deal, and in January 2001 it published New Deal - a success story, listing the New Deal’s successes. Nonetheless, they too have noted some problems. For example, consistently, between a fifth and a quarter of the people who get jobs from NDYP have not kept them for more than three months. The TUC has also been concerned about the New Deal’s failure to achieve equal results for people from different racial groups. While 40.3% of white people leaving the programme have left for sustained employment, for people from ethnic minority groups, this figure falls to just 31.0%. In addition to not getting sustained jobs from NDYP, black and ethnic minority young people are also much less likely to be put on the subsidised employment option.

The government has been trying to increase involvement of employers in the apprenticeship system as well as making changes to academic and vocational education more broadly. In 1997 when the Labour Government came to power there were just 75,000 in Apprenticeships. Now, there are over 250,000 apprentices and it is hoped that by 2008 this will have grown to 300,000 people in apprenticeship training. In early 2003 Sir Roy Gardner said was asked by the Chancellor to head up an employer’s Task Force on Apprenticeship to encourage more employers to use Apprenticeships as a way of meeting their skill requirements and to advise on the changing needs of employers and young people. Presenting the Task Force’s final report (www.employersforapprentices.gov.uk) Gardner highlighted several areas that need to be improved in the current arrangements:

• the government needs to spell out a clear strategy to support our vision of how Apprenticeships fit into the framework of educational and career options open to young people

• skills brokerage service need to be optimised to find new Apprenticeships opportunities, to ensure employers can recruit apprentices, and to identify appropriate, high quality training provision employers require.

• more targeted marketing of Apprenticeships was needed within specific industry sectors.

The New Deal is perhaps the most well known, but there have also been several other major policy initiatives aimed at improving young people's life and career chances, such as the Connexions service (which offers young people information, confidential advice and practical help via telephone, the web, or through their personal advisers) and Education Maintenance Allowances (EMA). EMA is a weekly payment of £10, £20 or £30 a week depending on household income. The money is intended to help with the day-to-day costs for young people who stay on at school or college - such as travel, books and equipment.

The Government’s emphasis, at least initially, was on getting people into jobs. Arguably now the approach has shifted towards keeping young people in education, or at least gaining skills that will help to ensure their employability over their working lives. It is the Government’s ambition to move from having one of the lowest rates of participation in post-compulsory education and training in the OECD to one of the highest. On 23 February 2005, the Department for Education and Skills published the 14-19 Education and Skills White Paper (www.dfes.gov.uk/publications/14-19educationandskills/) which set out its aim is to increase the participation in education rate at age 17 to at least 90% and to transform secondary and post-secondary education so that all young people achieve and continue in learning until at least the age of 18 years. It is also envisaged that Employers - through their Sector Skills Councils - will play a central role in developing 14 new specialised Diplomas to replace many of the different vocational qualifications now in use. These will require young people to achieve appropriate standards in one of 14 specialised areas: Health and social care; Retail Public services; Hospitality and catering; Land based and environmental; Hair and beauty; Sport and leisure; Engineering; Manufacturing; Travel and tourism; Construction and the built environment; Creative and media; Information and communication technology; Business administration and finance. On 18 July 2005 the Government published a Green Paper entitled “Youth Matters” (www.dfes.gov.uk/publications/youth/docs/youthmatters.pdf) which aims to radically re-shape services for young people giving them more choice and influence over services and facilities. It is by no means certain that the proposals in the White and Green papers have the support of a majority of the members of the Labour Party, let alone other politicians and there will be much public debate surrounding the issues of greater choice in terms of subjects and schools; whether or not schools can select their pupils and if so, on what basis; and the setting up of new Skills Academies jointly run by industry and education to provide employers with specialist training for their sector.

3. Role and views of the social partners on Youth at work

Please provide brief details of the role and views of the social partners regarding the current policies and regulatory framework on youth employment in your country.

a) Do the social partners play a specific role in youth employment policy shaping? In Youth employment policy implementation? At what level (National/sectoral/company)?

b) How do the social partners contribute to specifying qualification and initial training needs for the national economy?

c) What are the main issues collective agreements on youth employment deal with?

d) Is there any sectoral plan/programme/action aimed at attracting and/or retaining young people in sectors lacking of workforce availability? Has this plan/programme/action been jointly -between Trade Unions and Employers Organisations- conceived and implemented? If not who devised it?

e) If a sectoral plan/programme/action existed, what were the objectives, the target, the content?

f) What were the results?

The TUC has been at the forefront of the campaign to introduce a minimum wage for 16-17 year olds arguing that at this age it would protect them against exploitation, but set at a prudent level would not provide an incentive to give up education or training, or reduce the number of jobs on offer to young people. The TUC pointed out that the statistics showed that part time workers in this age group actually earn more than full time workers, suggesting that employers were keen to employ students. Before the introduction of the NMW in October 2004, some commentators predicted that the NMW would be most likely to have a negative impact on the employment rates of disadvantaged groups within the labour market such as female workers and young workers, but such predictions have not be borne out by the facts and in October 2005 the rate was increased to the levels set out in section 1 above.

The TUC has largely supported the NDYP, but in its assessment of the impact of the scheme was very concerned about the extent to which employment generated was sustained and its failure to achieve equal results for people from different racial groups.

The Government has worked hard to involve the Confederation of British Industry (CBI) and employers in identifying the type of skills that will be needed in the workplace. In its White Paper the government has suggested that employers will have more opportunity for involvement through 22 Sector Skills Councils (covering 85% of the workforce). The proposals are to develop new Sector Skills Agreements that will cover what needs to be done to improve skills in each sector, providing those bodies funding universities and colleges with the information they need to target resources.

Union Learning Representatives (uk0305102f)are also expected to encourage thousands of people to return to learning, many of whom previously lacked the confidence to do so. A new Union Academy, backed by the Trades Union Congress (TUC), will further support workplace training.

4. Discussions and research

Are there currently discussions underway about ways to tackle the issue of youth unemployment among trade unions and employers’ organisations?

Please specify the main recent research on that topic.

Is there any short term policy planned?

As will be clear from the discussion of the White and Green papers in the previous section there is currently much discussion about the future of youth employment and education in the UK. The proposals in both the white and the green papers are subject to a public consultation process. This is the main way in which the various actors are involved in the programmes being developed by the Government. Through this public consultation process the Government seeks the views of all those affected by the proposals; young people and parents; the private, voluntary and community sectors; local authorities; the connexions service and the youth services; and all those involved in the provision of services to young people.

5. Commentary

The government has achieved a significant reduction in youth unemployment since it came to office. However, the TUC’s concerns that the NDYP has failed to generate any long term employment or to achieve equal results for people from different racial groups is significant. As was noted in the report on the National Skills Task Force Final Report (www.eurofound.europa.eu/eiro/2000/feature/uk0010196f.html) the government’s approach to reducing youth unemployment and to increasing the skills and employability of its young people seeks to address only the supply side of the equation - the skills that people hold - it does little to address the demand side of the equation in terms of providing opportunities for satisfying and rewarding work. Policies designed to produce a highly skilled, well-educated workforce are a vitally important, but on their own not enough to counter the deep-rooted structural weaknesses confronting the UK economy. Add to this the TUC’s concerns that low wages for young workers in the UK mean that many young people cannot afford to save for retirement because they work in places (like shops and hotels) that no longer provide workplace pensions and are earning too little to save enough on their own, the picture of youth unemployment in the UK begins to look rather less attractive than the initial statistics reveal.