Dr Steve McCabeBy Dr Steve McCabe – Birmingham City University’s Business School

The need to improve the lot of young people who end up out of work, so called ‘NEETS’ – those not in education, employment or training – has been identified as being a major concern by the OECD (Organisation for Economic Cooperation and Development).

In their report ‘Education at a Glance 2013’, the OECD shows that young people, defined as being between 15 and 29 years old, who, end up being NEETS can expect to be out of the labour market for an average of 2.3 years.

Though we have the highest graduation rates in the developed world, we also have a disproportionately high number of young people with no qualifications or experience in work; only Japan and Spain being in a worse position. Prolonged unemployment merely makes matters worse.

Those who are out of work become unemployable and there are increased social costs due to breakdown in relationships and health problems due to smoking and obesity which is more prevalent in the poor.

And attitudes which develop early in life have a habit of becoming ingrained and passed onto subsequent generations. The cycle of the ‘poverty of aspiration’ becomes a vortex which sucks families into a never-ending cycle of hopelessness.

George Osborne should recognise this in his spending review today and take urgent action.

What we are being told about the importance of continuing austerity is simply going to divide our society even more and create a lost generation.

Andreas Schleicher who is head of education at the OECD argues that the young are the most prominent ‘victims’ of austerity. He believes that there should be greater investment in vocational education and training to assist NEETS.

And as Neil Carberry who is the CBI’s director of employment and skills, also believes, the severe lack of skills we have in this country is undermining potential for growth. He states that because competiveness relies on having a highly skilled workforce we desperately need to invest in training the next generation.

An IMF report Fiscal Adjustment in an Uncertain World suggests that our position is not as awful as we have been told and that there is more potential to invest in economic development and increasing the prospects for the young.

Given that unemployment among 16- to 24-year-olds is some 20% and that the number of NEETS is over a million, urgent action is needed.
Here in the West Midlands we could do with the funding being focused on developing opportunities in the sectors for which there is potential; most especially engineering and creativity.

Though the local Greater Birmingham and Solihull Local enterprise Partnership (GBSLEP) is to receive the first allocation of money from the ‘single pot’ advocated by Lord Heseltine last year, no effective spending can commence for at least two years. This means that those leaving school this year and who don’t get a job or go into education or training face difficult conditions over the next few years.

Writing in The Observer recently social and economic commentator Will Hutton argued that more can be done by chancellor George Osborne such as recommencing the ‘Future Jobs Fund’ programme set up in 2009 but cancelled by the coalition government. As Hutton explains, though this scheme required a subsidy of £6,500 for each job created, over 105,000, there was, according to the Department of Work and Pensions, a benefit to society of £7,750 for each recipient.

George Osborne should invest in construction of houses and the transport infrastructure.

The former is essential to create affordable homes for future generations. The latter is advocated by The Institution of Civil Engineers (ICE), in their recently published report ‘The State of the Nation, Transport 2013’ in which they argue that it is essential in contributing to short-term recovery and long-term economic development.

Any increased investment would lead to apprenticeships to train school leavers in traditional trades.

George Osborne should exercise choice to ensure immediate prospects for the jobless youth (as well as other unemployed).

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Dr Steve McCabe

Dr Steve McCabe

Birmingham City Business School