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Third of young people trapped in underemployment by 2018, warns LGA
A third of all young people will be out of work or trapped in underemployment by 2018 unless local areas are given more control over skills and training, a new report from council leaders has warned yesterday.
New analysis from the Local Government Association (LGA) has revealed that of the 2.5 million young people struggling to find enough work across England and Wales, only 340,000 are likely to find more work over the next four years, leaving 2.12 million still unemployed or underemployed.
The true scale of youth employment is being hidden because government headline figures focus on the unemployed and not young people who are only working part-time hours or are over-qualified for their current job. So while youth unemployment appears to be falling, in reality there are 738,000 more young people that are unemployed or underemployed than in 2005.
The research commissioned by the LGA reveals that when unemployment is combined with underemployment the situation looks much worse than reports appear to show. Despite young people saying they would like to be working more, there is almost a third of young people's time being unused and equating to an additional 2 billion hours a year. This is what the LGA has defined as ‘total hidden talent'.
Across the country, two in five young people are unemployed or underemployed, but in the worst affected areas this can rise to as much as half of all young people in their area.
Urban areas outside of London such as Sheffield, Leeds, Newcastle and Manchester are the worst hit by unemployment and have seen the biggest increases, while more regional areas in the West Midlands are suffering most from underemployment. For example, 26 per cent of young people in Birmingham City Region are unemployed and just 14 per cent are underemployed, but this trend reverses for the more out-of-town areas in the West Midlands with only 16 per cent of young people are unemployed but 20 per cent underemployed.
The Government invests around £15 billion each year in young people, but the current centrally-run schemes mean that thousands of providers respond to complicated national funding rules, rather than focus on the needs of young people and local employers across England. The result is that young people are leaving education and training with skills that don't match local jobs.
The LGA, which represents councils in England and Wales, is now warning that national schemes designed to help young people move into work could be overlooking a generation of young people who are only working part-time hours or not fulfilling their potential such as graduates working in a non-graduate role.
At the moment, despite councils having responsibility for ensuring that young people have suitable education and training opportunities, they still have no power over funding. And although councils have a unique insight into local differences, they cannot reflect this in the local skills and training offered.
Councils want to be able to bring together youth initiatives around the needs of local employers and are calling for:
youth skills to be locally funded to ensure young people are trained for jobs likely to be created by local growth, tackling the skills mismatch
the underperforming Youth Contract to be devolved to councils so they can target young people at risk of disengaging, and help them into more apprenticeships and new jobs
to locally commission the Work Programme to support long-term unemployed young people to make positive local choices. This would support the National Careers Service to help young people make these choices.
It is estimated that giving local authorities and their partners the powers to become the link between young people and local employers could cut the number of unemployed people out of work by 20 per cent, save £1.25 billion to the taxpayer and pump £15 billion into the economy over 10 years.
Cllr Peter Box, Chairman of the LGA's Economy and Transport Board, said:
"It is simply unacceptable that we expect a third of young people to be underemployed in 2018 and it would be a travesty if young people were being left behind when the rest of the economy is growing and benefitting from this.
"It is all of our responsibility to make sure that young people are getting the best possible start in life. We need to listen to the young people that are telling us that they want more work and not let them fly under the radar because of employment statistics that make us think the situation is improving.
"We know that the Government is investing a lot to help young people into employment. But councils know the reality of what is happening on the ground and our relationships with local people and businesses could be used much more than it is at the moment.
"We know how successful local organisations, such as councils, businesses and education providers, can be when working together and we would urge the Government to use this to its advantage and give us a say in the schemes that are aiming to get young people into work."
Notes to editors
Total Hidden Talent is defined as follows:
Unemployed young people, who are both seeking work and available to start.
Economically inactive young people who want a job, but aren't currently looking for various reasons.
‘Underemployed' young people, who want more hours than they currently work.
Young people on ‘government employment and training schemes' not working full-time hours.
Young people who are working in temporary jobs but want permanent work.
Young people who are ‘over-qualified' for the work they are doing.
The report was commissioned from the Centre for Economic and Social Inclusion (CESI) by the LGA.
The hidden talent figures are broken down as follows:
1.25 million are not working, but would like to
760,000 are in work but would like more hours and
425,000 are not working to their potential, for example graduates working in non-graduate jobs
The youth unemployment rate in England and Wales (where this analysis is focused) now stands at 20.8 per cent, compared to just 5.5 per cent for 25 to 64-year-olds.
We calculate that unemployed and underemployed young people want more than two billion more hours of work annually than they are currently working. This equates to 323 hidden hours per young person per year, or 521 hidden hours per economically active young person.
One-third of graduates working in non-graduate roles are also involuntary temporary workers, on a government scheme, and / or underemployed; and more than four in 10 involuntary temporary workers are on a Government scheme and / or underemployed.
Victoria Daly, Senior Media Officer
Local Government Association
Telephone: 020 7664 3308
Media Office (out-of-hours contact): 020 7664 3333
Local Government House, Smith Square, London SW1P 3HZ
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