‘Lost generation’: why can’t young people get jobs? – The Latest

0:00This is The Guardian.

0:11We are at risk of a lost generation. Employers aren't taking people on as much as they used to. And young people who lack experience, because they're, by their definition, at the start of their careers, are often the first to bear the brunt of that. The life chances of people are really being eroded at the moment. So this is more than an economic crisis. It's a moral one. The government has been warned of a lost generation of young people with more than a million out of work or education. From The Guardian's Today in Focus, this is The Latest with me, Lucy Half. Richard Partington, our senior economics correspondent, is here.

0:49Richard, you've been covering this major, long-awaited report from former Labour Minister Alan Milburn this morning about the scale of the problem of the number of young people out of employment, but also out of any form of education or training. How big is the scale of the problem? It's really big. And it's incredibly worrying what it says about the position that the country is in and the prospects for the next generation. So the report this morning from Alan Milburn, who was health secretary in Tony Blair's new Labour cabinet, spells out a pretty stark issue. We have over a million young people aged 16 to 24 who are not in education, employment or training.

1:28This horrible word, NEAT, is the acronym. But I mean, it's something that I don't think people like to use as a term, but it encapsulates something really quite big and profound. And that's that the life chances of people are really being eroded at the moment. There's a multitude of reasons why the more and more young people are out of work. It's just worth saying, I think, that this is quite a specifically UK problem, isn't it? when you compare with similar economies in Europe, that the problem is far worse here than it is elsewhere. It's substantially worse here. And it's been getting worse as well, which is one of the most troubling parts.

2:04So we're seconded only by Lithuania and Italy in terms of being very much at the bottom of the table. Amongst the rich European economies, we're in one of the worst positions. And since 2015, things have been going backwards. We've fallen down the rankings relative to other countries. So in terms of that figure that you mentioned, Richard, that over a million people, young people are currently unemployed, six in 10. So a majority of that number have never had a job. What are some of the reasons for this? I mean, there must be a huge number of socioeconomic factors playing into this picture. I think this is why it's one of the most troubling statistics, troubling issues in the country at the moment.

2:42As you say, six in 10 never had a job. Almost half have been neat for more than a year. so they're really detached from both the education system after they've left school and they're not engaged in the jobs market either and the big reasons for this are several fold one of the biggest factors is rising mental ill health amongst young people and that can be attributed to a whole manner of things but there is a lot of concern about smartphones social media doom scrolling in the middle of the night having a consequence on rising levels of anxiety and depression. We're in a pretty weak jobs market at the moment.

3:18The economy is not doing well as a consequence of the Iran war. Cost of living crisis had already hit after the COVID pandemic and Russia's invasion of Ukraine. Employers aren't taking people on as much as they used to. And young people who lack experience, because they're by their definition at the start of their careers, are often the first to bear the brunt of that. There's been tax increases from the government as well. And that has played a contributing role as well. But also this picture that it is really difficult for a young person to get their first entry level job, given that the jobs market has contracted, as you say.

3:51And also that this is the COVID generation, the post-COVID generation who had those very, very challenging years of university education or school education on screens. Alan Milburn described this as the bedroom generation. Absolutely. And also, if you think about AI and the way that's disrupting the jobs market, that is particularly taking away employment opportunities in the entry-level positions that young people would rely on. Also in a cost-of-living crisis where people haven't got as much money to go out and spend as they might normally do, such as in the pub or a restaurant meal at the end of the week.

4:28The hospitality sector, the retail sector, again, places where young people would typically get their first start or maybe have a Saturday job are the places where employment opportunities are falling most. Yeah and what another striking thing from Milburn's report was that 84 % of the young people that he spoke to said that they wanted to work so that sort of runs against this idea that this is kind of generation of Gen Z snowflakes who were too busy making TikToks to go to work that that feels untrue. One of the things that can perhaps feed into that stereotype is the rising number of young people claiming welfare for their mental health which is sharply on the rise.

5:07How did Milburn diagnose that problem? He diagnosed the problem as the welfare system isn't geared up to encourage people to work. It's a really delicate and tricky argument for a former Labour cabinet minister to get into with a Labour government that has a patchy record of addressing issues around benefits. We saw the big welfare rebellion by backbenchers last year, really the start of undermining Keir Starmer's authority as we see this today. I take a plucky prime minister to take on this issue again. But what Milburn says is that for young people who don't have job support, the consequence is going to be that they're going to be on benefits and that we're spending more on benefits, substantially more on benefits than on employment support, work coaches.

5:59on average young people who are neat with health issues only get around a minute per week of employment support the government spends for every 25 pounds spent on benefits just one pound on employment support so milburn's argument is the benefits bill you know there is a concern about the cost of it but to get it down he says you need to support people to find a job and i think that's going to be the challenge that the government has to face to deal with. And also what went wrong for Starmer last year, where the argument was about cost cutting from the benefits bill rather than about resolving this issue of productivity and employment in the jobs market, and particularly this issue of young people who have become detached, to use Milburn's phrase.

6:44The other issue that he has raised is things that Labour have done since taking office two years ago, nearly one of which is hiking national insurance rates for employers, but also raising the minimum wage, which Milburn says was something that came up repeatedly when he talked to employers, and particularly when it comes to entry level jobs, those Saturday jobs in a pub or a cafe that we spoke about. Definitely. And this is something that employers will speak to you about time and again. It's something that the Labour's critics speak about time and again, the Conservatives, the Lib Dems, They will frame Labour's increase in employer national insurance contributions as a jobs tax that has had the biggest impact on entry level roles, particularly in hospitality, leisure, retail and the minimum wage again.

7:33So Labour stood on a manifesto promise to equalise youth rates of the minimum wage with the full adult minimum wage and has been steadily increasing that rate for under 24s. But it's probably going to hit the pause button. Certainly, Milburn appears to be advocating for that because there is a concern that if you raise the minimum wage, you begin to price young people out of work. But again, that is a controversial argument to make. And Milburn acknowledges this and he also says, yes, employers are going to complain about this, but the biggest driving factor is not employment costs. It is that people in a cost of living crisis can't spend as much as they would normally.

8:16And therefore, employers in those sectors like hospitality and retail aren't making as much money to cover their wage bills. So moving forward, Richard, this is the first half of Milburn's review into all of this. We're expecting another report about what his recommendations will be in the autumn. But it seems like either direction, it's potentially politically difficult for Labour. So the solutions might be the more challenging part of this. I think this is the hardest part of the issue. I mean, Milburn talks about a system reset. Yeah. Now, to me, that sounds very familiar to language that we'd heard before the general election from Keir Starmer about mission based government and needing to.

8:54That's a nostalgic phrase. It's a nostalgic phrase that we don't hear much about today. But Milburn talked about, you know, if ever there was a mission that a politician, you know, if it's Keir Starmer or a replacement as Labour leader, ever needs to champion, it is cutting across this multitude of issues that affects youth unemployment. And that's going to involve, as he put it, benefits. It's going to involve employment support. It's also going to involve schools, reforming education, making it less exam focused and more preparing for work in future. It's going to involve social policy questions and technology.

9:32So smartphones, social media ban, for example. And it's going to involve the tech system. It's going to involve companies and employers taking a more active and engaged role with young people. It's a huge issue. And I think Milburn, speaking at the launch today, took these on really head on. He said there are no easy solutions. I mean, we get a lot of populist politicians saying with this one simple solution, we can fix everything. I think that the issue here is that change is difficult. and there are going to be a lot of different things that need to be done to address this. Yeah, well Richard, fascinating.

10:10Thank you so much. Thank you. That's it for today. My huge thanks again to Richard Partington, the Guardian's senior economics correspondent. You can keep up with his reporting over at theguardian.com. And I really recommend listening to our new sister podcast from our colleagues at Guardian US, stateside with Kai and Carter. Last night's episode is with Lauren Gambino on what's going wrong for the Democrats in the California primary. Thanks for listening to this episode of The Latest. Today in Focus, we'll be back in your feeds as usual tomorrow morning. The Latest, we'll be back tomorrow night.

10:40This episode was presented by me, Lucy Hoth. It was produced by Angus Neal. The senior producer was Ryan Ramgobin. The lead producer was Zoe Hitch.

10:51This is The Guardian.