Let’s Build More Bridges For Young People Into Work

The Breaking Barriers report is absolutely right to focus on building more bridges into work for young people and moving the debate away from cliff edges.

That is how we get more young people crossing over to the job market, which is seriously short of skills and workers in many sectors, such as finance, IT and engineering, right now. Retail and hospitality will face the same challenge when demand returns after a difficult 12 months.

Employers will play their part in building these bridges, but they will ask for help now with the cost of doing business, which risks being elevated further by government policy, for example around the Employment Rights Act

This is part of what The Breaking Barriers report alludes to in de-risking taking on young people.

Three practical solutions:

We suggest three practical solutions: national insurance relief for under-25s, high-quality work experience and a stronger role for recruiters in Local Skills Improvement Plans (LSIPs).

Your report was published a few days before the Prime Minister’s announcement of National Insurance relief for apprentices under 25, in his hope it will reduce the cost of hiring young workers. But he must go further to make hiring young people more attractive for employers.

That is why we support the House of Commons Work and Pensions Committee’s recent call for a cut to employer National Insurance contributions for all workers under 25. While we believe the best move for the labour market would be to reverse the reduction in the employer NIC secondary threshold, this proposal offers a bridge to businesses that are already managing higher costs and adapting to significant employment rights changes.

But of course, we do not believe the NEET crisis can alone be solved with a nickel off NICs. And it is clear from the Prime Minister’s many announcements on reversing youth worklessness this week, that he agrees with that.

As your Breaking Barriers report says, young people are finding a labour market that is becoming increasingly hard to enter.

Recruiters see this challenge every day and have a vital role to play in developing local solutions to youth worklessness.

A work experience programme for young people must sit within your report’s call for a national transition framework. That means moving beyond rigid placements towards flexible, hybrid and project-based opportunities that enable young people to contribute and learn, rather than simply observe. In this regard we support the Prime Minister’s recent call for more ‘quality’ and ‘meaningful’ work experience.

And let’s strengthen the voice of recruiters within LSIPs, so we develop place-based solutions that reflect local labour markets.

More broadly, reducing youth disengagement requires system change. After all, success depends on earlier support, clearer pathways into work, stronger partnerships with employers and listening to young people.

Universal £5,000 payment for employers

To build capacity among employers to recruit and support young people, financial incentives of up to £5,000 should be available to organisations offering apprenticeships, traineeships and T Level placements. There is no current universal £5,000 payment for employers offering apprenticeships, traineeships and T Level placements.

But financial incentives alone will not be enough. They must sit alongside a skills funding system that prioritises young people, and an employment framework that gives businesses the confidence to create the entry-level roles, apprenticeships and placements that provide a first step into work.

Looking at this even more broadly, we suggest a refocus of Growth and Skills levy funding on young people.

Recent changes to the Levy, including access to shorter courses have made it better but there is more to do.

Let’s be Bold

Let’s be really bold and consider preventing employers from accessing further levy funding if they have trained more apprentices aged 25+ than those aged 16 to 24. And look at ways to ensure that learners who are already qualified at or above Level 6 (equivalent to a full undergraduate degree) should no longer be eligible to start a levy-funded apprenticeship – without some carve-out for vocational subjects that really require this sort of additional help. That would help build the youth employment system that your report recommends.

The new Prime Minister has invited employers to work closely with the government on some of the biggest challenges facing the country, including youth unemployment, tackling skills shortages and improving living standards. We are glad to see this; the government should view businesses as partners in a shared national endeavour and use the actions of the public sector to catalyse investment, improvement and growth in the private sector. That inevitably frees up money for employers to invest in employment and training.

Employment Rights Act

But there is a warning for this new government about the implementation of its Employment Rights Act: many of the measures actually make it harder for the government to meet its commitment to reduce youth worklessness, especially the guaranteed hours proposals. Current plans for guaranteeing hours would likely limit the use of agency workers when we know that temporary work is often a great way into the labour market for young people. This work is an opportunity to learn both the soft and hard skills employers want and move into permanent work should that be right for them.

Businesses need the confidence to hire for potential, not just experience. If we make hiring more rigid and costly, employers will create fewer opportunities, and young people will pay the price. If we are serious about tackling youth worklessness, every reform should be judged against one simple test: does it create more opportunities for young people, or fewer? And that is a question that needs to be asked across many government departments. The Department for Work and Pensions should co-ordinate across government so that it does not give with one hand while others take away those opportunities with ill-planned policies that clog up the labour market and make it harder for businesses to create the jobs and growth that, rather than government, they are best placed to deliver over the long term.

By Shazia Ejaz, Recruitment and Employment Confederation (REC) Director of Campaigns