By Dr Sotirios Zartaloudis, Associate Professor in Comparative European Politics
POLSIS, School of Government, University of Birmingham
One of the major announcements of the new Labour government to improve the UK economy was the so-called “Youth Guarantee” whereby “every 18 to 21-year-old in England will get access to an apprenticeship, training or education opportunities or help to find a job”. This was part of a wider reform plan outlined in the Department for Work and Pensions (DWP) Get Britain Working white paper and presented as the country’s “biggest employment reforms in a generation” aiming to increase the UK employment rate to an unprecedented 80% to reduce spending on social welfare/benefits and boost growth levels.
The problem: high numbers of (young) inactive workers
With the current unemployment rate of 4.3% and employment rate of 74.8%, one would justifiably be wondering why the PM is describing Britain as a country that “isn’t working“. It is not unemployment (i.e. when one is looking for a job but is unable to find one), however, that the government’s reforms are aiming to address, but raising levels of economic inactivity (i.e. unemployed and not actively looking for a job).
Since 2020 when many countries imposed lockdowns to mitigate the impact of the COVID pandemic, the UK inactivity skyrocketed to almost 9 million people and has not decreased since, making it an outlier compared to other European economies such as Ireland, the Netherlands and even usually laggard countries in (un)employment rates such as Spain and France – all showing now greater rebounds and activity rates than the UK.
Worryingly, the UK is the only major economy that has not recovered from 2020 in terms of activity rates. Moreover, the UK inactivity rate is the highest among young (16-24-year-olds) with more than 41% of this group being inactive during July-September 2024. In addition, rates of young people Not in Education, Employment or Training (NEET) are now the highest in a decade.
Youth Guarantee: The solution?
Against this context, the Labour government announced that all 18–21-year-olds will be offered the opportunity to “earn or learn” and if they do not take up offered opportunities will face having their benefits cut. The Youth Guarantee will be implemented in coordination with local government from spring 2025 when eight youth “trailblazer” areas will receive £45 million to target those young people who are NEET.
While the emphasis on addressing inactivity rates of young people is welcome by some, it is important to realise that the Youth Guarantee does not bring currently any new policy tools but is rather based “on existing provision and entitlements” that young people can access already.
In other words, the Youth Guarantee could be perceived as some repackaging of existing policies or relabeling of measures that already exist. This has justifiably caused some concerns among policy makers and/or experts with some calling the lack of new policy tools “immensely frustrating”, calling for extra investment or support in this area while others dismissed the initiative as not sufficient to address the collapse of apprenticeships in recent years.
Another suggestion is to expand the Youth Guarantee to include all 16-24-year-olds as a stronger intervention against inactivity rates of all young people and not just the 18-21-year-olds.
What does the international experience tell us about it?
The idea that inactive (young) people will be more likely to enter the labour market by receiving training, education or apprenticeship/job placement, also known in policy and academic circles as activation, is neither new nor novel both in the UK but also internationally. Interestingly, and rather surprisingly after Brexit, the UK Youth Guarantee is reminiscent of the long-standing European Union (EU) Youth Guarantee which was first introduced in 2013 offering the same opportunities as the UK initiative, but for people under the age of 25.
In 2020, as a response to the COVID pandemic, the EU strengthened this policy with the so-called “Reinforced Youth Guarantee” by raising the age limit to people under 30. Hence, the critique against the announced UK Youth Guarantee being potentially too limited by targeting only 18-21-year-olds seems to hold also in reference to a more generous EU scheme which currently runs in all 27 EU members.
But will it work?
The greatest cause for concern is whether activation in general and the so-called Youth Guarantees in particular, will succeed in reducing inactivity rates. While international organisations such as the OECD and the EU are very keen on such measures, comparative analysis has shown mixed results. Some have questioned whether the answer to inactivity is the availability of better jobs in the economy, while others have questioned whether inactivity (mainly due to poor (mental) health) is about incentives within the UK benefits system. If either of these critiques is true, the Youth Guarantee faces an uphill battle against inactivity irrespective of the limitations to its design and implementation.
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The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of the University of Birmingham.
We know the White Paper’s fine words will not work! We face massive youth unemployment challenges. The Paper’s own data (Fig 6) shows that over 20% of 18-21s are already on benefits in poor areas such as Blackpool and Hartlepool – compared to only 2-3% in places like Bath or Oxford. The Paper accepts we need a strong skilled labour market but nowhere mentions the role of lower taxes and labour regulation – indeed even praises the “strengthened employment rights framework” brought in by the Employment Rights Bill.