If one generally thinks that the current ‘Great Recession’ in UK hit all those who are in the working age group equally, then think again. It is actually those youth between 18-24 years old who are the worst hit. The recent statistic shows that youth unemployment is escalating more than proportionate compared to adult or the middle age workers
In the year to March 2009, unemployment rates for 18-24 years old already increased by 4% to 16.1% and are poised to rise further by the end of the year. The near future will be very bleak for those graduates or fresh school leaver as nearly half of UK firms surveyed, expressed no interest in headhunting
Having said so, the problem of young people unemployed in UK is not any new issue. It has been there since early 2000s. Despite combating youth unemployment is one of Labour’s core policies, nevertheless it is quite futile and many of the programs are failure. This is because, in years of robust growth the unemployment rate did not fall
In the year to March 2009, unemployment rates for 18-24 years old already increased by 4% to 16.1% and are poised to rise further by the end of the year. The near future will be very bleak for those graduates or fresh school leaver as nearly half of UK firms surveyed, expressed no interest in headhunting
Having said so, the problem of young people unemployed in UK is not any new issue. It has been there since early 2000s. Despite combating youth unemployment is one of Labour’s core policies, nevertheless it is quite futile and many of the programs are failure. This is because, in years of robust growth the unemployment rate did not fall
Why persist?(1) Low qualification. Every year, quite a sizeable number of students who leave school or college without at least completing their upper secondary such as A-Levels. Statistically, after a year of job hunting, less than half of them were employed. Basically it makes economics and business sense for firms to have preference over those who are more qualified. Well educated employees are generally perceived to be more independent at workplace, fast learner and able to understand complex instructions
(2) Lack of experience. Experience positively correlates with productivity. This is very true especially in jobs that requite mental skills. Those with more years serving the society are perceived as more efficient. Although paying them a higher salary, the costs will be eventually widely spread out. So, costs per unit of task will be quite low, compared to new inexperience school leavers
(3) Training costs. Most firms feel that providing training to younger inexperience workers is a waste of time and money. They may also think that some parts of production process will be affected while waiting these young people to gain on-the-job experience. In fact, they prefer to free ride on workers who already got training in their previous jobs
(4) Generous benefits. Many feel that young unemployment is partly due to the high unemployment benefits which actually put them in a comfort zone rather than pressuring them to look for jobs. This is a classic case of frictional unemployment, but could be a worse one as young people may take longer duration to land on a suitable job. It should be reduced or adjusted in accordance with how many years one has been working or paying national insurance
(5) National minimum wage. Under the National Minimum Wage Act 1998, this policy came into effect on 1st April 1999. Its core purpose is to provide those people with low income a better living and also to encourage unemployed to take up jobs. However, some employers feel that young workers ‘don’t deserve’ this scheme. They argue that early working years are to accumulate useful experience. As such, forcing them to provide minimum wage just means raising production costs unnecessarily
(6) Revamping operation. In any typical organisation, younger workers are often viewed as least valuable. As such they will be the first to go shall the firm decides to restructure the whole operation in period of recession or mergers. It follows the principle of LIFO-last in first out
(7) Hysteresis. This theory advocates that if someone is out of job for quite some time, he or she may find greater difficulty to enter the job market in the future. It is not difficult to see why. A bleak gap of two years on a CV looks bad at any age, but straight out of school, a young person can be branded as unemployable. Equally, a pile of rejection letters is good enough to damage one’s self-esteem particularly when this young workforce does not have past working experience to keep them going. Some may choose to quit altogether while some may engage in immoral activities. This will not only cause hardship in finding a job, but jump start a cycle of deprivation that are difficult to break or expensive to fix
(8) Experimental years. Arguably, younger people tend to have higher tendency to voluntarily quit their jobs than older workers. Their initial experience in labour market is likely to contain some elements of ‘shopping around’, before landing on a job which they find most appropriate. Besides, their opportunity cost of doing so is low. They are less likely to ‘need’ a job to support a family
(9) Crowding out. This could be a mix blessing from the enlargement of EU. With influx of foreign workers especially from Eastern European, local jobs have been crowded out. Firms are more willing to hire them since they are willing to take on low paid jobs & also their working attitude is much better. Also most of those menial jobs which are previously filled by unskilled young British workers are now occupied by them
(6) Revamping operation. In any typical organisation, younger workers are often viewed as least valuable. As such they will be the first to go shall the firm decides to restructure the whole operation in period of recession or mergers. It follows the principle of LIFO-last in first out
(7) Hysteresis. This theory advocates that if someone is out of job for quite some time, he or she may find greater difficulty to enter the job market in the future. It is not difficult to see why. A bleak gap of two years on a CV looks bad at any age, but straight out of school, a young person can be branded as unemployable. Equally, a pile of rejection letters is good enough to damage one’s self-esteem particularly when this young workforce does not have past working experience to keep them going. Some may choose to quit altogether while some may engage in immoral activities. This will not only cause hardship in finding a job, but jump start a cycle of deprivation that are difficult to break or expensive to fix
(8) Experimental years. Arguably, younger people tend to have higher tendency to voluntarily quit their jobs than older workers. Their initial experience in labour market is likely to contain some elements of ‘shopping around’, before landing on a job which they find most appropriate. Besides, their opportunity cost of doing so is low. They are less likely to ‘need’ a job to support a family
(9) Crowding out. This could be a mix blessing from the enlargement of EU. With influx of foreign workers especially from Eastern European, local jobs have been crowded out. Firms are more willing to hire them since they are willing to take on low paid jobs & also their working attitude is much better. Also most of those menial jobs which are previously filled by unskilled young British workers are now occupied by them
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