Writing Off The Young Unemployed As A Wasted Generation

Currently youth unemployment rate is at a record of 21 per cent , yet large skills shortages persist.Why can't we join the dots? Have we become like ego-manic football club owners who buy ready-made foreign players and send their youth team graduates into oblivion? The results are the same in both cases: growing dole queues and social expenditure and the taxpayer picks up the bill. Youth unemployment has affected some communities much more than others. Unemployment among young black men has doubled in three years, rising from 28.8% in 2008 to 55.9% in the last three months of 2011 .

The rise of automation

How did we get into this mess? First, there are very long standing reasons. Our technical education has lagged behind Germany’s. There, the skills profiles of craft apprenticeships were systematised as long ago as 1897. There is even a special system of apprenticeship called Duale Ausbildung allows pupils on vocational courses to do in-service training in a company as well as attend a state school. Jobs have been lost due to automation or new working processes, such a bus conductors, secretaries and clerks. Only recently, Morrison’s is introducing cash counting machines that will replace 700 jobs. The growth of jobs in other sectors such as finance, IT, marketing and design has been much smaller than the jobs lost. They also require higher level skills of a very different type and are located away from many of the old industrial areas where unemployment is highest.

Some immigrants have greatly benefited the economy by bringing valuable skills and generating employment through starting successful business. However, the mass immigration of the last boom is a different matter. For many employers the opportunity to recruit trained staff from East Europe was too good to miss. Transport FirstGroup took on 1,400 east European drivers off-the-shelf, a trend followed by Tesco, Stagecoach amongst many others. Railtrack cut many engineering jobs, only to be forced by passenger fatalities to recruit large numbers of skilled staff at short notice from India. Training budgets were slashed and profits increased.

The value of apprentice schemes

However, some employers are notable exceptions: Rolls Royce and BAe have a long history of providing excellent, massively over-subscribed apprenticeships. Network Rail, Railtrack’s successor, is another good example. Yet this is not enough. Apprenticeship schemes are massively over-subscribed. According to the National Apprenticeship Service, 1.13m applications were received through its online database, with about 106,000 vacancies advertised, some 80% of the total apprenticeships available across the country. The sons and grandsons of immigrants are left on the dole queue while another set of immigrants obtained jobs. What about offering the unemployed lorry, bus and coach driver training, which would make them instantly employable? What can we do about the employers who don't train, but buy-off the shelf? There are two main options: reputation and levies.

Company reputation

Reputation could work by issuing good employer certificates to organisations that have invested over a certain percentage of their income on training. They could be given a training star. Those that fail to qualify would by inference be poor employers. This could be extended further with stars for paying a certain level of corporation and other taxes, achieving equalities and health and safety targets and so on. Awards could be given to companies. Having a certain number of stars could be made a requirement to win large government contracts. Would employers be interested, or would they say stars are for losers? Well, there would be some who take that attitude. For instance Google seemed quite unembarrassed about its track record on paying UK taxes. However, Starbucks was shamed into making a small tax payment, so it's worth a try. If the reputation approach did not succeed, the other option would be to levy employers over a certain size in industries with poor training records. Those with a good record would have their money refunded and become exempt from the levy in due course. Excellent trainers could receive additional payments. This scheme would be very much like the former industrial training boards. However, this would involve administration costs and many might see this as overly bureaucratic. The current Government has gone half way by restricting immigration to a narrow range of jobs. Will it have the will and imagination to take the extra step to prevent a wasted generation?

Posted by George Blair on May 21st 2013

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