Boris Johnson is enjoying his vaccine bounce, which has left a gloomy Labour Party needing a shot in the arm, but it won’t last forever. One reason is that the Conservatives are neglecting their potential achilles heel – youth unemployment – along with a growing body of evidence that the coronavirus pandemic will have a permanent scarring effect.
A report by the Resolution Foundation think tank reveals that 16 to 24-year-olds accounted for nearly two-thirds of the total fall in payrolled employment in the year to February, and were three times more likely to leave work than 25 to 64-year-olds. Those leaving education, including graduates, are struggling to get their first job. The foundation says the rise in youth unemployment is “heavily skewed” towards black and Asian people. The unemployment rate among young black people rose by 10 percentage points to 35 per cent last year, 2.7 times the rate among young white people.
This undermines the complacent claim by the widely criticised review of racial disparities set up by Johnson after last summer’s Black Lives Matter protests, which found a “broadly positive” story on work and pay in the past 25 years.
Last July, Rishi Sunak announced the Kickstart scheme, under which jobless 16 to 24-year-olds will be offered six-month work placements with wages paid by the government, promising to “open the door to a brighter future for a new generation and ensure the UK bounces back stronger as a country”. Perhaps the chancellor should have called it Slowstart.
Ministers have been very coy about telling MPs how many young adults are on the programme in their constituencies. It may have something to do with their eventual admission that only about 6,000 people have started a placement on the scheme, after about 15,000 applications for the 150,000 places available. This followed digging by the Alliance for Full Employment, co-founded by Gordon Brown, who has warned that “government complacency is betraying a generation of unemployed”, with an estimated 1,000 18 to 24-year-olds having been out of work for at least six months in every constituency.
Ministers need a kick up the backside to turn Kickstart into a guaranteed offer of work or training for all young adults. Senior Tories tell me that the overall unemployment figures look better than predicted last year, and hope that the UK’s flexible labour market will ensure a rapid jobs recovery. But young adults might not reap much benefit, partly because employers will opt for “last in, first out” – a problem that will worsen when the furlough scheme lifeline ends in September.
“Young people will increasingly bear the brunt of the unemployment crisis … even as the economy recovers,” according to a study by the Learning and Work Institute and the Prince’s Trust, founded by the Prince of Wales. They are over-represented in sectors like hospitality, which were hit hardest during the pandemic, and under-represented in those likely to see the strongest job growth.
The study put the cost of higher youth unemployment by next year at £6.9bn in lost national output and £2.9bn in lost tax revenue and higher benefit payments, and estimates the “scarring effect” for young people entering the labour market this year at £14.4bn in lost work and earnings over the next seven years.
Covid has widened an already dangerous generational divide; there are precious few signs of any government desire to “level up” in that respect. Older adults did relatively well out of the pandemic, while house prices are rising again, making it harder for younger people to get a foot on the property ladder. Few of the younger generation will enjoy a slice of the estimated £180bn pile of personal savings built up over the past 12 months.
Although Johnson is seized by the urgent need for catch-up in schools, the government’s spending decisions prioritise older people, who are more likely to vote and to support the Tories. Purely coincidental, of course. Johnson vetoed Sunak’s attempt to unpick the triple lock on the state pension, so it rises by 2.5 per cent when inflation is 0.7 per cent. Johnson’s allies say this is because the triple lock was guaranteed in the 2019 Tory manifesto. But that didn’t stop him ditching the promises made on overseas aid or the size of the army.
The Future Jobs Fund introduced by Brown’s government, providing temporary subsidised jobs for young adults, helped avert a lost generation after the 2008 financial crisis. The Tories scrapped it after winning power in 2010, with David Cameron saying it was “expensive, badly targeted and did not work”. But analysis for the Department for Work and Pensions later found that society gained £7,750 per participant through wages, increased tax receipts and reduced benefit payments.
The Tories need to learn that lesson in order to prevent a lost generation after the coronavirus crisis.