Firms need to get onside if Labour’s youth employment push is to have a chance of working

Alan Milburn’s report will call for benefit cuts but lack of entry-level job opportunities is also driving crisis

‘I’m scared about my future’: young people on the stress and desperation of jobseeking

A generation is being sold short. Almost a million young people are not in education, employment or training (Neet). Austerity and the Covid pandemic cast a lengthy shadow, AI is upending the jobs market, and the cost of living is soaring – all under the microscope of the social media age.

This week Alan Milburn’s landmark report on young people and work will bring Britain to a fork in the road: either continue on this path of state and market failure or sharply change direction.

It will be a big test for Andy Burnham’s government. Milburn will call for controversial benefit cuts for under-25s in exchange for a legal guarantee of a job or training. Alongside changes to education and health, his plan will take a decade to implement.

Behind his argument is a principle Labour has struggled with – that restricting benefits to encourage work is a good idea.

The system clearly is not working. Milburn makes the case eloquently – pointing out that for every £1 spent on job support £25 goes on benefits. But there are also important caveats: change will count for nothing unless employers play their part; half of all Neets are not on benefits, and bad jobs and a lack of entry-level opportunities are far bigger drivers of Britain’s youth jobs crisis than the generosity of the benefits system.

Last week the Bank of England deputy governor Clare Lombardelli told me Britain’s young people were bearing the brunt of a “low-gear economy”, with employers freezing recruitment amid the war in the Middle East.

Unemployment among the under-25s has risen at the fastest rate since the 2008 financial crisis to reach its highest level relative to the total for all ages since the early 1990s. Young people now make up about 40% of all unemployment.

All of this compounds a drop in entry-level jobs over the past two decades. The Saturday job died long ago, while to make matters worse, those positions at the start of the career ladder are most at risk of automation or replacement by AI.

Perhaps unsurprisingly, the places in Britain with the fewest job vacancies have the highest Neet rates. Highlighting stark regional divisions, young jobseekers in Rotherham face a sixfold gap in opportunity relative to their peers in the Cotswolds.

The preferred fixes called for by employers are tax cuts, looser regulations, and holding back rises in the youth minimum wage. But while policy costs are unquestionably a factor to consider, and the state could do more to help young people get ready for work, the problems go much deeper.

When Milburn’s report comes out, corporate Britain will be out in force to show willing. Amazon, Marks & Spencer, Shell and Pret a Manger are among those who have already spotted the PR opportunity to showcase their efforts. But most are doing nowhere near enough.

Of course it costs time and money to run youth outreach programmes, work experience schemes and to help recruits who need support to get up to speed – especially in tough economic times. But the consequences from not doing so are becoming increasingly clear.

Almost half of jobseekers under 25 surveyed by the organisation Youth Employment UK think employers are unsupportive. Stories of the applications black holes and the catch-22 of companies demanding experience – even for entry-level roles – are all too commonplace.

In Britain’s youth jobs crisis issues with the quality of work on offer and opportunities for progression also play a part. Low paid, insecure jobs are rife – most notably in places with the highest Neet rates. Over the past quarter of a century in-work poverty has increased. Among working households, the relative poverty rate is almost a fifth (18%) compared with 13% in the mid-1990s.

Figures this month show people’s job satisfaction has dropped to the lowest level recorded by the British Social Attitudes survey. Among young people it is particularly gloomy: separate figures show most believe that not everyone can go as far as their talent and hard work will take them.

Young people are more likely to find insecure work, only to end up jobless again within weeks. More than one in 10 are on zero-hours contracts. For many that flexibility is welcome and can be launchpad to a career – a point seized on by employers’ groups. But despite the gig economy boom of the past 25 years, Britain’s Neet rate has only fallen below 10% once.

Countless studies show badly paid and insecure work is linked to poor mental wellbeing. Across all types of jobs, almost 1 million people in Britain suffer from work-related stress, depression or anxiety. But those in poor-quality employment are up to three times more likely to leave the workforce than those in the highest-quality positions.

For the growing number of Neets grappling with mental health problems the prospect of entering a labour market like this is daunting.

Milburn’s view is that, despite these challenges, emphasising participation is unequivocally the right thing to do. With extra support the barriers to work could be overcome.

The argument is getting a job is better than life sitting in a bedroom doomscrolling. Work can give structure, routine, social connects, status and – here’s hoping – some financial security. On the flipside, unemployment is a killer for wellbeing and financially ruinous.

For those who reach the age of 24 without ever having had a job, even if they successfully re-enter the labour market, they stand to lose up to £300,000 in lifetime earnings.

Like most people, the young want to work. Across society as few as 4% of working-age adults say they would ideally prefer not to – dropping to just 2% of under-25s.

But fixing the social contract will require more than benefit cuts and a 10-year overhaul of the state. There is a big job, too, for employers.