Is London in a youth jobs crisis?

0:02The employment stats are in. And they do not look good for London. They show that the capital is losing jobs faster than any other region in the country, and young people are being hit the hardest. So why is this the case? And what kind of future can young people expect to have in London? Hi, and welcome back to The Standard Podcast. I'm Tamara Kormournick. If you're new here, hit follow and give us a rating. For all the latest news, head to standard.co.uk. Coming up, London's youth jobs crisis.

0:41When it comes to the London jobs market, the picture is not pretty. The number of people out of work in London has almost doubled in less than two years. Unemployment among young people in the capital has hit a nine-year high, and some 88 ,000 Londoners aged 16 to 24 were unemployed in the 12 months leading up to September last year. That's a rise of 11 ,000 people in a year. In this episode, I'm joined by The Standards business editor, Jonathan Prynne, to unpack the latest figures from the Office of National Statistics.

1:17Hi, Jonathan. Thank you so much for joining us on the podcast. My pleasure, Tamara. I want to start with asking you about the official unemployment rate for London, which rose to 7.2 % in the September to November quarter. This is the highest in the country and also the worst since the lockdown of the winter of 2021. So Jonathan, why is London losing jobs faster than any other region in the country? It's a really, really good question. I'm not sure it's entirely obvious why that should be. We know that jobs are being shaken out of the economy at quite a rate. Nationally, there were something like under 180 ,000 fewer jobs in December last year than the previous December.

2:09But London does seem to be suffering more than any other region. Now, one possibility is that we know that two of the sectors have seen the biggest shakeout are hospitality and retail. They're obviously huge employers in London, central London in particular. And it may be that London has been disproportionately hit by those sectors being the worst affected by what's happened over the last year or so. It was interesting that the sector with the biggest gain was health services, health and social services not surprising after the huge investment that Labour poured into the NHS after the 2024 budget and although health services obviously important in London I just wonder whether a lot of those jobs are being created outside London in towns and cities around the provinces and that's another reason why London appears to be lagging behind the rest of the country but it's not entirely clear we do have to use a bit of guesswork what i found particularly interesting looking at the figures was that it seems like young people have been hit the hardest with the the unemployment rate which has risen from 16.6 percent to 18.8 percent in the year to september why have employment figures disproportionately hit young people the employment rate for young people is is always higher than the rate for people sort of above 21 and that's all to do with there's a lot of people in that age group who are students or in training or whatever not in full-time employment so it's always a bit higher but it has jumped dramatically recently and it is is worrying i think my take on it is a lot of young people find jobs in retail our friends retail and hospitality again often part-time jobs and it's those sorts of roles that have been really badly hit by succession of new taxes or increased taxes and the minimum wage so in the autumn 2024 budget we got the increases in national insurance rates they fell hardest on employers employing a lot of relatively low paid or part-time or student workers so there was a big shakeout then.

4:37And then the minimum wage increases have gone up fastest for the 18 to 21 age bracket. And there's good reasons for that. The government wants to equalize minimum wage rates between that 18 to 21 sector and other adults. So there's an admirable ambition behind that. But the net effect on that has to make 18 to 21 year olds suddenly a lot more expensive to hire, double digit increases year after year and for that reason and the national insurance and the business rates employers particularly in hospitality and retail have suddenly decided they don't want to hire young people anymore or far fewer i know this from my son's experience he's trying to get a job in hospitality finding it really hard three or four years ago every pub in london every cafe in london had a staff wanted sign outside it now you walk in they say no sorry mate we don't need anyone It's really changed.

5:35And London, again, because of the preponderance of hostility and retail in London, seems to be the worst affected. Right. I want to talk about the changing volume of opportunities for young people now. So the number of entry level jobs comprising junior positions, graduate roles, apprenticeships have fallen by almost a third since the arrival of ChatGPT, according to some research by Adzuna, the job site. What do you think is more detrimental to young people? The prevalence of AI and the subsequent rollouts of new technologies or the economic conditions at the moment? I don't think you can separate them because the economic conditions are driving employers to find alternative, cheaper ways of running their businesses.

6:27Now, hiring and retaining and paying a salary to a full-time employee is relatively expensive. Installing some technology to do the job is obviously massively cheaper. so you know although the ai revolution would have happened anyway i think there's any question if you make the cost of employment much higher which the government has done albeit for good reasons by increasing national insurance by increasing minimum wage rates etc then inevitably you are going to force employers to take a second look at how many people they want to take on and can they run their businesses just as efficiently or more efficiently with technological solutions to fulfill the tasks that human beings would have done before.

7:20We'll take a quick break. Coming up, I asked Jonathan his view on whether we are really in a jobs crisis and what the future might look like for young people living in London.

7:35Welcome back. Let's get straight back to the interview. I want to talk now about earning potential, looking ahead to the future. Do you think young people have a bright future in London? Yeah, I do. I always do. I always think, you know, London is this astonishing, vibrant and energetic place of innovation. And I think that's what will ultimately come to the rescue of young people. New businesses will be created, new entire new sectors will be created. So in due course, I'm confident, and this has always happened historically, there will be new job opportunities in areas that we perhaps never even thought of.

8:18The economy will turn eventually, hopefully, hospitality and retail and all these other sectors that are suffering a bit at the moment will start hiring again. So, yeah, I do think people shouldn't give up on London. London is a massive job creation place and in due course the tide will turn. It isn't easy at the moment and of course if you do get a job it's still very expensive to live here and that's a whole different issue but yeah I'm confident that London will carry on creating huge numbers of jobs in the future. And you mentioned hiring picking up again. Do you think that we're going to see many, many more zero hours contracts as a result of the expense of hiring people at the moment.

9:10And do you think job stability is, you know, a thing of the past? Where do you see the future? Well, I mean, job stability has been massively undermined over the last few, I don't think job stability doesn't really exist anymore, particularly in those sectors where zero hours contracts have been very prevalent. However, that's all going to change this year and next year with the new legislation in the Employment Rights Act. Zero hours contracts will be pretty much outlawed in their current form. There'll be a lot more job security for young people, well, people of all ages, but I think it will particularly affect people joining the workforce for the first time.

9:53Now, the counter argument to that is that employers might say, oh, God, well, it's even harder now to take someone on and it's harder to get rid of them if we don't like them. So we will cut back on our recruitment and hiring even further. I think that is the danger. But, you know, I feel that the jobs market at the moment generally is a less stable place to be. unemployment is going up and yeah I think that the concept of a job for life is unfortunately long gone. And would you describe the current climate as a jobs crisis? For London I think you know the fact that we saw unemployment rise so steeply it's pretty much doubled in a couple of years from 3.8 % to 7.2 % in the last quarter according to the ONS and that's not quite doubling, but very close.

10:48And that is a really alarming trend. The fact that unemployment, joblessness, people looking for work has grown so quickly over such a short space of time. And where is it going? Are we going back to the era of the one in 10 that we had unemployment back in the 80s and 90s, which, you know, I think most people categorize as mass unemployment. I do think we need to be worried. I don't think a jobs crisis is over-hyping the situation. As I said, I think in the long run, things will be okay. The cycle always kind of re-establishes itself in the long run. But I think for the short to medium run, we do need to be worried about this and we do need to address it and find ways to make it easier for businesses to start hiring again.

11:41And that's The Standard. For all the latest news, head to standard.co.uk. If you'd like to get in touch, email us at podcasts at standard.co.uk. We'll be back here tomorrow morning. See you then.