Britain Looks to Cut Welfare Amid Surge in Youth Unemployment and NEETs
By David Milliken
Britain’s Youth Unemployment Crisis and Proposed Welfare Cuts
Personal Stories Highlight the Challenge
LONDON, Nov 13 (Reuters) - Faisa Omar applied for more than 500 jobs in the UK and got nowhere — a slog she likened to "shouting into the void". It took a 10-week training course, tailored to the green energy sector, to finally land her a job within a month.
Her story is one the Labour government hopes to replicate on a much bigger scale, as it prepares to receive a report and proposals next week that would, controversially, restrict youth sickness and disability benefits in order to fund back-to-work programmes aimed at the nearly 1 million young people not in work, education or training.
Scale of the NEET Problem in the UK
Britain had 981,000 people aged 16-24 not in employment, education or training (NEET) in the second quarter of this year, accounting for 13% of the age group as a whole and a share that was the second-highest in Europe last year.
Its 15.6% youth unemployment rate is also unusually high compared with the 3.4% rate for older workers — elsewhere in Europe, the youth jobless rate is typically only just over double that of older age groups.
Former minister Alan Milburn, a party ally of Prime Minister Andy Burnham, warned of a "lost generation" in May in the first part of his report into youth unemployment.
Funding Back-to-Work Programmes
Disagreement is likely to arise over Milburn's plans for how to fund more back-to-work programmes against a backdrop of stretched public finances, something he addressed in a newspaper interview on Thursday.
"I'm not saying that any of this will be easy, or that it will be pain-free," Milburn told the Times. "Candidly, it could mean that some people will get less financial support."
Milburn said earlier this year that he wanted to shift the 25-to-1 ratio of spending on benefits versus employment support more towards the latter, and draw lessons from the Netherlands and elsewhere where more young people are in work.
Next week he will propose barring under-25s from ill-health supplements to standard unemployment benefits and also moving them to a more restricted version of the main disability benefit.
But his report is unlikely to rapidly reduce the £8 billion ($11 billion) a year spent on benefits for young people.
Cuts are also likely to be unpopular among many lawmakers in the Labour Party who thwarted attempts by previous prime minister Keir Starmer to cut welfare, handing ammunition to opposition parties who accuse the governing party of favouring welfare recipients over workers.
UK Youth Employment Problem Stands Out
Effective Programmes and Training Initiatives
Michael Houlihan, UK head of employment charity Generation, said programmes with a proven track record in getting people into jobs should be scaled up.
Around 70% of people on Generation's courses found a job within 12 months, double the average for similar ones, he said, with the key being to ensure courses were tailored to the precise needs of employers in sectors with vacancies.
For 27-year-old Omar, attending a course in 2023 at Generation focused on specific roles in green energy helped her nail down a job within a month.
"Before Generation I had the drive but I didn't have the map. So I didn't know how to get into sustainability. Climate change was one of my passions, but I didn't know how to ... find an accessible path into the green sector," he said.
Impact of Artificial Intelligence and Economic Factors
One part of the problem now, according to James Tuttiett, an executive at IT consultancy FDM Group, is that artificial intelligence has reduced client demand for junior staff. He said FDM now had to train recruits for longer before hiring them out.
"You have this silent hiring freeze where AI can increasingly do a lot of jobs that exist in white-collar work," he said, adding that a higher minimum wage and increased employer social security payments had also limited hiring.
UK Offers Less Back-to-Work Support
Barriers Facing NEETs
So-called NEETs' reasons for not being in work or training vary, but many lack educational qualifications or report having health conditions that make it harder to get a job.
Nye Cominetti, an economist at the left-leaning Resolution Foundation think tank, said Britain's welfare benefits were not unusually generous compared with European countries with lower rates of NEETs. But young people receiving health-related benefits in Britain faced fewer requirements to engage with a process of getting back to work.
Lessons from the Netherlands
Sonja Bekker, a professor of employment law at Utrecht University in the Netherlands, said her city sent people to knock on the doors of young people not in education or work, to offer solutions such as childcare or mental health support.
Vocational schools mean many Dutch pupils are on months-long work placements aged 17, and two-thirds of 16- to 17-year-olds have part-time jobs — compared with less than a fifth in Britain.
Rising NEET Rates in Europe
Even in the Netherlands, though, the rate of NEETs has begun to rise. Like in Britain, AI and taxes are sometimes blamed.
"We don't know whether it is a long-term trend or whether it is just a bump in the economic cycle," Bekker said.
($1 = 0.7543 pounds)
(Reporting by David Milliken; Editing by Hugh Lawson)
