Youth unemployment: five facts that take you beyond the headlines

Youth unemployment is a bigger issue for UK cities than would at first appear.

“A country that is not able to find opportunity for its youth is in trouble”. This is Sergio Arzeni, former Director at the OECD, giving his departing speech at the OECD LEED conference last week. He’s referring to the UK, which ranks in the top five countries with the highest youth unemployment in the OECD (as a proportion of the total 16-24 population). The headlines from last month’s labour market update tell us that unemployment is continuing to fall and wage growth is accelerating in the UK. Youth unemployment has also fallen. But this is the national picture; it’s not the full story.

1) National figures hide enormous disparities between cities.

Youth unemployment in 2011 was 3.5 times higher in Grimsby compared to Cambridge. These disparities are apparent in more recent youth JSA claimant rate: the youth claimant rate in May 2015 in Grimsby is more than 10 times higher than in Cambridge.

Figure 1: Youth unemployed proportion by city, 2011

Youth unemployed proportion by city, 2011-01

Source: Census 2011. Note we have deliberately taken the number of young people as a proportion of all young people so that figures are not distorted by high numbers of young people in full-time education. Map this data on our Data Tool.

2) Youth JSA figures vastly underestimate the level of youth unemployment in cities.

The general trends in youth unemployment and the youth JSA claimant rate at city level are similar – in cities with high youth unemployment, the claimant rate is high, and vice versa. But the proportion of young people unemployed tends to be around two times higher than the youth JSA claimant rate, and in some cities, such as Aberdeen and Luton, it is more than three times higher. This serves as a reminder that current JSA claimant rates – often used to provide the most up-to-date picture of youth unemployment at the local level – vastly underestimate levels of youth unemployment – in some cities more than others.

In general, there is a smaller gap between the two indicators in cities with high youth unemployment – or in other words, there is a higher propensity for young people in these cities to claim unemployment benefits. This may be because spells of unemployment are more frequent and longer in duration, or because financial support isn’t available elsewhere.

Figure 2. Youth unemployment compared to youth JSA claimants, 2011

Youth unemployment compared to youth JSA claimants, 2011-01

Source: Census 2011 and Claimant Count, NOMIS, 2011

3) 2 in 5 young unemployed people in cities do not have five good GCSEs.

Nearly 40 per cent of young people in cities do not have five good GCSEs (Figure 3) and this rises to 58 per cent in Grimsby.

Young people without five good GCSEs (below level 2) are 1.4 times more likely to be unemployed than their peers. Raising qualifications is an important part of supporting young people into work but not the only answer. In some cases employer recruitment practices may act as a barrier to young people finding suitable employment.

Figure 3: Share of youth unemployment in cities by highest level of qualification, 2011

Share-of-youth-unemployment-in-cities-by-highest-level-of-qualification-2011

Source: Census Microdata, 2011

Figure 4: Youth unemployed proportion by highest level of qualification, 2011

Youth-unemployed-proportion-by-highest-level-of-qualification-2011

Source: Census Microdata, 2011

4) Nearly 1 in 2 young unemployed people in cities have never worked.

Young people are often caught in a ‘Catch 22’ situation – it’s hard to get a job without work experience, but without a job it’s difficult to gain work experience. 45 per cent of young unemployed people in cities have never worked. This is the average across all cities – it tends to be higher in cities with high youth unemployment. It also compares with 11 per cent of unemployed people among the older working age groups.

Young people’s access to work experience varies enormously in different parts of the country. In Hull and the Humber, for example, an area with some of the highest youth unemployment rates in the country, just 29 per cent of employers offer work experience compared to over 46 per cent in Cheshire and Warrington.

Figure 5: Young people that have never worked, 2011

Young-people-that-have-never-worked- 2011

Source: Census Microdata, 2011

5) Youth underemployment and hidden unemployment are higher than the official youth unemployment rate.

Just over 10 per cent of all young people are unemployed. The youth unemployed proportion is more than double the total number of 16 to 64 year olds unemployed, 4.4 per cent.

An additional 6.6 per cent young people that would like a job but are not actively looking for one – the ‘hidden unemployed’ – and a further 4.6 per cent of young people are working part-time because they couldn’t find a full-time job – the ‘underemployed’. Taken together, the youth ‘underutilisation’ rate stands at 21.4 per cent. In Greater Manchester and Merseyside, this figure rises to over 30 per cent.

Figure 6: Youth underutilisation in Greater Manchester, 2015 Q1

Youth-underutilisation-in-Greater-Manchester-2015-Q1

Source: Quarterly Labour Force Survey, 2015

Youth unemployment is falling but remains high compared to other OECD countries (the OECD average youth unemployed proportion was 7.6 per cent in 2013 compared to 12.9 per cent in the UK) and it can have huge social and financial costs for individuals and cities. High levels of underemployment, not just unemployment, highlight the need to support young people into good jobs with opportunities for progression. Increasingly, as youth unemployment falls, there are fewer young people who are ‘job ready’ and higher proportion requiring more intensive support – and cities are having to redesign programmes introduced when youth unemployment rates were at their height accordingly.

All of this requires bringing cross-sector leaders including employers together – as we explored in our previous report, Youth Opportunity: Lessons from US cities on improving young people’s employment prospects – to address the complex barriers that young people can face. Austerity presents some major challenges to those trying to deliver support to young people but it also creates additional urgency for cross-sector leaders to come together to find and deliver solutions.

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Fran Parry
1 July 2015 23:04

Hi Naomi. Great if you would come and talk to the Youth Employment Convention on 24 Nov 15. Would that be possible?

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