Unemployed young northerners

In last night’s leaders’ debate all three parties emphasised the importance of increasing the number of apprenticeships and vocational training to help build our industrial base and get young people back into work. This is to be welcomed.

ippr north is currently researching some of the most deprived communities in northern England. For many of the young people we have spoken to, one of the major barriers they face in getting into work is having to have previous experience. They agree that having more apprenticeships and in-work training opportunities would most help them get into work. It’s also their experience that education and qualifications do not help, but ‘who you know’ does – which is also difficult for them to achieve.

These young people are critical of training courses that do not lead to work. Too often the major objective is simply for young people to be ‘seen’ to be meaningfully occupied; if the process has no job prospect at the end, there is a danger of vulnerable young people becoming even more disillusioned about the benefits of education and the opportunities available to them. This risks lowering aspiration, and reinforcing a belief that education does not lead to employment.

But perhaps most fundamentally for the North, the majority of the election debate has been focused on the issues of ‘labour supply’ – particularly training and skills – perhaps because this is the area where the leaders feel they have most levers.

For a sustainable recovery to happen in the North, the parties must do more to tackle the thorny issue of creating new, high-quality, low-skilled jobs. Only when jobs offer the opportunity for progression and decent pay, can they truly offer a way for people to improve their lives. The risk otherwise is that we further entrench inequality.

Evelyn Tehrani

Back to work?

With the latest figures showing a rise in unemployment – but a fall in the number claiming unemployment benefit – it seems like there is an opportunity to momentarily shift discussion away from the Clegg bounce and leadership debates and towards welfare policy. So far the parties have largely focused on making sure voters know that they will be tough on welfare, but with unemployment at 2.5 million, this is insufficient.

Lots of similarities between Labour and Conservative welfare policies are evident from the manifestos, but also some important differences, in approach as well as policy.

There are similarities in the sound-bites: Labour aims for a ‘swift return to employment’ and the Conservatives want to ‘get Britain working again’. And in the headlines: both main parties are keen to offer more targeted and personalised support, focus attention on job creation and prevent a scarred generation of young people. There are similarities in flagship programmes, namely Labour’s Flexible New Deal and the Conservatives’ single Work Programme. And both parties talk of toughening up the system with proposals on sanctions and benefit cheats.

But there are also significant differences. Labour’s manifesto commitments include an extension to the Young Person’s Guarantee, a better off in work guarantee, a living wage in Whitehall, and rises in the National Minimum Wage. And the narrative of a ‘big society’ that underpins Tory proposals to tackle welfare dependency highlights different roles for the state, welfare to work organisations and individuals.

What of the Liberal Democrats? Well, their manifesto commitments on welfare are noticeably thin. There is a focus on supply-side measures such as job creation and especially green jobs, but proposals to tackle unemployment are mostly absent.

It is clear that many challenges remain around welfare reform. Amongst the most significant is personalising welfare. Emerging findings from ippr’s innovative Now it’s Personal research are highlighting the need for interventions that don’t just isolate employment support and that recognise a wider set of needs such as childcare and transport. Also needed are advisers who have good knowledge of the local environment and in particular good relationships with local employers and training providers. In addition a focus on supporting sustainable job outcomes with more support for people once they are in work to manage the transition as well as a volatile and flexible labour market.

A tougher welfare policy may seem like the right tactic to appeal to voters, but with 2.5 million people currently unemployed and with public sector cuts still to come, this will not be enough. More radical change is needed for the welfare system to be genuinely responsive, personalised and effective.

Dalia Ben-Galim

The first step to tackling ‘the neet problem’… ditch the term ‘neet’

A new word has entered common usage as a result of this recession. With young people being the worst affected by the downturn (nearly double the percentage of 16-24 year olds are unemployed compared to the rest of the adult population), we’re hearing a lot about those who are not in employment, education or training. Or ‘neets’ as they’ve become known.

This is undoubtedly one of the most important problems thrown up by the recession. There is a mounting body of evidence that being unemployed early in life can ‘scar’ people later on. If you are out of work when young you are more likely to have spells of unemployment later in life. You’re likely to earn less in the future, too. And we know that being in work is massively important for general well-being, sense of identity and social mobility. So the Conservative candidate for Hammersmith, Shaun Bailey, was right to be hitting the streets this weekend to highlight the problem of youth unemployment. Despite a slew of programmes introduced by the Labour government – from guaranteeing jobs to increasing education places – it looks likely that they’ll miss their target of 7.6% of 16-18 year olds being ‘neet’ this year.

The trouble with ‘the neet problem’ is that it isn’t one problem. It’s lots of very different problems that have been unhelpfully bundled together in a single term. How can politicians come up with policies to help ‘neets’ when it includes everything from top graduates unable to find jobs and those leaving school with no qualifications? And what about those who are ‘neet’ in cities dependent on manufacturing compared to those in rural communities? And don’t forget the difference between men and women – women are four times more likely to have an identified barrier to entering the labour market than men.

The things that are stopping these groups entering the labour market, and the policies that would therefore help them find work, are quite different. So perhaps the first step to tackling the ‘neet problem’ would be to ditch the term ‘neet’. Then we can have a proper discussion about the range of policies that are needed to support these very different groups.

Jonathan Clifton

Target financial advice where it’s most urgent: the City

Yesterday the Commons public accounts committee delivered a devastating indictment of the Government’s ‘complete failure’ to tackle high levels of consumer debt. The Committee found no one holding the reigns on the Government’s money guidance service, which aims to educate people to avoid debt problems. While advice is available at crisis point in the UK (the CAB soldiers on!), there is virtually no independent financial advice.

Given the public purse is cash-strapped it makes sense to target financial education to those who need it most.

Statistics show that debt problems are most common in low income households. But dig deeper and you find few examples of risk-taking behaviour. The number one cause of over-indebtedness is not ‘bad’ behaviour but job loss. The explosion of personal debt was driven in the main by the over-mortgaged middle classes who gambled on the buy-to-let bubble.

Looking further afield it becomes clear where money mismanagement is most problematic. A friend once met a City trader at a party. Politely making conversation, he said it must be a difficult job, derivatives sound so very complicated. ‘It’s easy really’, the trader replied, ‘you don’t have to understand them to sell them.’ Feckless bankers and overpaid traders repackaged, relabelled, and sold on shed loads of debt – and the entire country now faces a decade of high unemployment and savage cuts to public services as a result.

To be really effective money guidance initiatives could target the City regulators, MPs, and the bright young things in the Treasury. It’s a shame they weren’t implemented earlier. A cross-party class to advise Ken Clarke and Gordon Brown may have covered the perils of a cavalier attitude to regulation. The late Eddie George would have benefitted from homework on the importance of capital ratios in the banking system. Surely report cards for the Woolworth’s management – who wiped out 25,000 jobs in one swoop – would have read ‘could do better’.

The City offers one clear lesson: advisers on commission tend to give bad advice. Former RBS chief Fred Goodwin and his contemporary Victor Blank at Lloyds TSB were both ‘advised’ and ‘guided’ by advisers who made vast profits on the toxic takeovers of ABN-AMRO and HBOS. Better money management won’t help ordinary households to avoid spiralling debt. Sir Fred and his pals, however, should surely be first on the list for independent money guidance.

See our blog post on basic bank accounts Read our report Strength Against Shocks

Tess Lanning

Fearing the Double-Dip

We learn today (17 March) that the jobless rate in the UK remains unchanged at 7.8%. Nevertheless nerves are fraying about the possibility of a ‘double-dip’ recession, with large public sector job losses in prospect and figures also showing an increase in long-term unemployment.

The dreaded ‘W’ shape looms large on both sides of the Atlantic. Politicians here are anxiously eyeing the situation in the US where the pain of a ‘human recession’ has been felt sooner and more sharply.

US employers reacted to the recession by shedding workers rather than ‘hoarding’ them as in the UK, through wage freezes and shorter working hours. Heavier job losses are in part behind the doubling in long-term unemployment in the US over the past year, with an astonishing 4 in 10 unemployed workers out of work for six months or more.

The Government has now become part of the jobs problem in the US. States have reacted to large deficits by introducing deep spending cuts. New Jersey for example has seen widespread job losses among teachers and other state workers, with parents up in arms about the impact on their children’s education. A large number of February’s job losses were in government, with local government shedding 31,000 jobs (24,100 of those in education).

The Centre for American Progress has warned of the impact this is having on consumer spending, arguing that these actions are exacerbating the downturn rather than reinforcing the move towards recovering.

So what does this mean for the UK? Here there have been modest increases in public sector employment since the recession began. But this is set to change as the task of tackling the deficit begins in earnest, with a third of public sector employers planning job cuts in the first quarter of this year alone.

Long-term unemployment is creeping up here too. Despite extra government investment Jobcentre Plus and other employment programmes, the rate of those out of work for 12 months or more has reached its highest point since 1997.

Leaders on both sides of the pond will have a tough balancing act to negotiate in the coming months and years between tackling the deficit and spurring jobs growth. But politicians can take one lesson from the US. President Obama has, rightly or wrongly, been perceived as focusing on healthcare when large numbers of US citizens feel they are being left behind by a struggling economy. In terms of electoral strategy then, one message is clear: jobs should be the number one priority in this election. Uncertain times leave space for little else.

Clare McNeil, research fellow, ippr