We need a new approach to tackle youth unemployment: Lack of proper skills is strangling productivity growth across EU - ACCA Comment

Training shouldn’t be categorised as either “academic” or “vocational
It is no secret that productivity is not an area of strength for the UK. In fact, productivity levels in Britain are 21 per cent lower than the average for the other six members of the G7 – namely the US, Germany, France, Italy, Japan and Canada.
Clearly mindful of this fact, and the growing attention the UK’s productivity problem is receiving both at home and abroad, the chancellor announced with great fanfare in the post-election Budget that he wants to give Britain a pay rise – all part of his “productivity plan” to move the UK from a low-pay low-skilled economy to a high-knowledge high-pay economy.
Integral to the chancellor’s plan is the commitment to a compulsory apprenticeship levy for businesses with the idea of boosting the number of young people taking up this form of training. While a commitment to deliver 3m apprenticeships by the end of this Parliament is commendable, it points to a far wider problem around employability among young people, which is strangling productivity in not only the UK but right across Europe too.


It’s probably fair to say that young people in the UK aren’t having a particularly good time of things at the moment. Housing benefit, tax credits and maintenance grants all saw the sharp end of George Osborne’s austerity axe in last week’s Budget. But perhaps chief among the issues they face is the fact that the unemployment rate among under 25s is stubbornly refusing to dip below 15 per cent.
Mass unemployment among young people isn’t a problem specific to the United Kingdom. In fact, while unemployment rates might make for grim reading compared to the rest of the working age population in the UK, compared to some of our European peers, under 25s here are living in a relative employment utopia. Joblessness across the same demographic in Spain looks set to top 50 per cent any day now, and Greece, Croatia and Italy aren’t far behind. This is an endemic problem that a renewed focus on apprenticeships alone simply cannot solve.
Conversely, according to the latest statistics from the European Commission, in the first quarter of 2015 the estimated job vacancy rate across the EU-28 was 1.7 per cent. This shows an increase of 0.1 percentage points compared with the first quarter of 2014. In other words, while no one could say there is a surplus of vacancies, there is clear unmet demand for labour countable in the millions across Europe – and what’s more, it is getting bigger all the time.


It would seem that something is stopping employers right across Europe from filling these roles with under 25s. There is mounting evidence that the problem lies in a mismatch between what we are teaching our young people while they are in education and what employers require from them once they leave the system and are ready to work.
There is broad agreement across academia, politics and business that a clear educational mismatch is leaving young people ill equipped for the world of work. While learning on the job in the form of apprenticeships and similar initiatives can help redress this balance, real reform is needed to education systems right across Europe if we are to halt the continent-wide endemic of youth unemployment any time soon.
The primary change is a simple one. Rather than waiting until young people are ready for work before acting, when deciding the skills students are taught while in education, there must be a stronger focus on future employability, and importantly, not just in sectors of education traditionally thought of as “vocational”.


Across the education system in the UK there is clear delineation between the two types of study typically available to students. Depending on where the strengths of a pupil lie, they are currently guided into either a vocational style of education or an academic one.
While this may have been an appropriate approach 50 years ago, it is totally unfit for the modern world. Not only has it resulted in a stigmatisation of many types of vocational training, it has left those taking the more academic routes often ill-equipped for the world of work.
Apprenticeships are an important part of the puzzle, but they need to be delivered in a way that provides real academic and vocational opportunities to those that engage in them. This is not currently the case. In fact, in 2014 only 2 per cent of those participating in apprenticeship schemes were taking level 4+, the level commensurate with higher education.
Apprenticeships should not be seen as an option for those not suited to academia, but rather should be designed to open up career pathways for young people to become highly skilled and knowledgeable in industries which need skilled workers. At the moment, apprenticeships simply are not feeding into the areas where skills gaps exist.


At ACCA, we are pioneering a different approach. On a fundamental level, the qualification we offer is extremely vocationally targeted – often including in-work study similar to the apprenticeship model – with the primary aim of enabling our students to go on to successful careers in accounting, finance and business. It is therefore designed first and foremost to equip them with the skills required by employers to do the job for which they are paid.
However, due to the partnerships we have formed with institutions such as the University of London, our students can also study towards a university degree and then a masters qualification alongside their vocational studies, benefiting from numerous exemptions where the two modes of study overlap. This means an ACCA student can leave education with a best in class vocational qualification, designed to give them exactly what their future employer needs, along with an academic qualification from one of the most respected universities in the world.
This blend of the best of the academic and vocational aspects of education should be thought of as the future of education, not just for bodies such as ACCA, but also for our schools, colleges and universities.

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