DWP Research: Only 17% of Employers Say a Wage Subsidy Would Get Them Hiring Young People

Five DWP research reports published today feed the Milburn review, which reports in September. In the employer survey, 72% of employers who had used a government incentive said it had not increased the number of young people they hired.

• 72% of employers who had used government incentive programmes said they had not increased how many young people they hired
• 47% said a wage subsidy would make no difference to their hiring, and 17% said it would lead them to take on more
• Financial support and subsidies were still the most requested form of help, chosen by 72%
• Colleges are the education provider employers most commonly engage with (38%), but 36% said no provider had ever approached them
• Employers think young people mainly want pay above industry standards (40%). Among young people, 14% chose it
• The Jobs Guarantee is open only to 18 to 24 year olds who have claimed Universal Credit and looked for work for 18 months

DWP published five research reports this morning as evidence for Alan Milburn’s Young People and Work review, which reports in September. They came out alongside the ONS NEET figures, which put 981,000 young people aged 16 to 24 outside work, education and training, and roughly twelve hours after the department announced that the first Jobs Guarantee cohort had started work at Boots.

The employer survey is the one to read closely. IFF Research interviewed 500 employers by telephone in March. Among those who had used a government incentive programme, 60% said it had a positive effect on their workforce, while 72% said it had not increased the number of young people they hired. On wage subsidies specifically, 47% said a subsidy would make no difference to their hiring decisions and 17% said it would lead them to take on more young people than they otherwise would. Financial support and subsidies were nonetheless the most requested form of help, chosen by 72% of employers.

The same survey puts a floor under the Jobs Guarantee’s design. Employers who said a subsidy could shift their decisions most often named 50% as the minimum useful level, and the Jobs Guarantee covers wages in full. The smaller instruments look weaker against the same evidence, including the incentives worth up to £8,000 and employer National Insurance relief.

The Jobs Guarantee

DWP has committed to more than 90,000 fully funded jobs by 2029 under the scheme, part of a £2.5 billion package. Government funds up to 25 hours a week at National Minimum Wage, plus pension contributions, for up to six months. It is running in six areas including Greater Manchester, the East Midlands, and Birmingham and Solihull, with wider rollout promised later this year.

Eligibility sets the limit on its reach. It is open to 18 to 24 year olds who have been claiming Universal Credit and looking for work for 18 months. ONS puts 588,000 of the 981,000 NEET young people in the economically inactive group rather than the unemployed one. In DWP’s own survey of NEET young people, 38% were claiming any benefit at all. The qualitative study published today was commissioned because so called hidden NEETs, estimated at around half the total, have no contact with the benefit system.

The design does answer one thing young people asked for. Placements are paid, run for six months, and come with support beforehand. Across both DWP studies of young people, the most consistent request was for paid experience, on the grounds that unpaid placements are unaffordable.

What the surveys say

Education professionals, surveyed by YouGov, most often named motivation (67%) and work readiness skills (66%) as the factors affecting young people’s opportunities, and 66% said preparedness for work had declined over five years. A parallel survey of 1,058 NHS staff put lack of motivation at 55%. Employers named a perceived lack of soft skills and work readiness as their main challenge in hiring young people (41%).

Young people gave different answers. In DWP’s survey of 417 NEET young people, 84% said they wanted to be in employment, education or training. The barriers they cited most were a lack of available jobs (15%) and a lack of work experience (10%). Verian’s 30 interviews describe entry level roles that require experience young people have no affordable route to acquiring, and high volumes of applications that go unanswered or are rejected without feedback.

Asked what young people look for in a job, employers most often said pay above industry standards (40%). Among young people, 14% chose it, and their most common answer was interesting and fulfilling work (41%).

Today’s ONS data sits closer to the young people’s account. The annual increase in NEET numbers is now concentrated in unemployment, up 26,000 over the year, against 4,000 for economic inactivity.

NHS staff also pointed to structural causes when asked why NEET numbers have risen since 2021, including the loss of the traditional Saturday job, fewer entry level roles, employer costs and degree inflation.

Colleges and employers

Employers named colleges as the education provider they most commonly engage with (38%), ahead of schools (26%) and universities (20%). Those who hire 16 to 24 year olds were more than twice as likely to have engaged a college as those who do not, 55% against 25%, and more than twice as likely to offer apprenticeships.

Where engagement does not happen, employers pointed to staff time (41%), resources (34%) and the benefits not being worth the cost (33%). More than a third, 36%, said no provider had ever approached them.

Work experience is the weakest element across the reports. 62% of secondary teachers rated their school effective at providing good quality work experience, the lowest score of any careers activity they were asked about, with 29% saying their school was not effective and 9% saying it does not offer it. Where employers do engage with providers, the most common arrangement is unpaid work experience (49%).

Those figures give the sector a case to put to Milburn in September that does not depend on further subsidy. Engagement tracks hiring, a third of employers have never been contacted by a provider, and the barrier employers report is capacity rather than willingness.

A note on the evidence. The employer survey used 500 telephone interviews weighted to Business Population Estimates 2025. The education and healthcare surveys were online YouGov panels, of 1,004 and 1,058 respondents, reporting professional impressions rather than measured outcomes. Verian’s qualitative sample of 30 included only two young people who had been NEET for more than two years, and none below Level 1, so the research assembled partly to understand hidden NEETs leans toward the more qualified and more recently disengaged.

Milburn’s recommendations are due next month.