T HE latest figures from the Office for National Statistics show that unemployment continues to be a major concern in our capital. The overall unemployment rate stands at an alarming 9.9 per cent, the third highest in the UK.
These figures are shocking, especially as London is such an economically active and wealthy city, where there should be huge potential for talent to thrive. London’s economy is bigger than that of Sweden or Austria; it remains the European leader for inward investment with an annual £52bn foreign direct investment; and it is home to the headquarters of more international companies than any other European city. We must take action now to avoid the scarring effects of long-term unemployment.
Such high unemployment in the capital, particularly among young people, is a devastating waste of talent and can negatively affect people for the rest of their lives. One in four children in London lives in a workless household and we know that children who grow up in poverty are more likely to fail to achieve in school, perpetuating the damaging cycle.
Clearly the best way to boost employment is to get the economy moving and businesses growing. But even before the recession there were structural problems in London’s employment market that won’t simply go away with a return to growth. For example, even though the Olympics has already resulted in a huge boost in jobs in the east London host boroughs, these same boroughs will continue to have some of the highest unemployment rates in the capital without attention to wider social issues.
The good news is that, even in these challenging times, businesses are still creating jobs. But all too often unemployed people, particularly the young, are not best placed to get them because they do not have the right skills. The result is that companies often do not feel confident about taking a chance on a young, inexperienced worker when the outlook for their business is uncertain.
The government must look at how our schools prepare students for working life through better careers advice, guidance, and skills that employers need. Employers are also ready to meet the challenge by building strong links with schools and by providing quality work experience.
The CBI recently called for the introduction of a financial incentive to encourage employers to take on jobless young people, giving them that all-important foothold on the career ladder. The government has developed this idea with the introduction of its Youth Contract which gives companies £2,275 for every 18-24 year old they hire. This is welcome, but is not the end of the story.
We must also make it pay to get a job. With more than 5m working age people claiming an out of work benefit, welfare dependency is a pressing challenge. The benefits system currently acts as a deterrent for many people seeking employment. We need to make being in work more attractive than being on benefits and make it clear that welfare is not a career path.
Getting more people into apprenticeships will also help tackle unemployment, and the CBI has been working with the Mayor of London to boost the number of apprenticeship places in London and to broaden their appeal. Apprenticeships have often played second fiddle in the rush to secure a place at university. This perception is beginning to shift, but we need to emphasise how a good apprenticeship can be the start of an exciting career.
A range of London companies including HSBC, Accenture, Microsoft, Norton Rose, Visa Europe, Sony Music and Veolia have worked on the apprenticeships programme. This demonstrates the different career options that are now available through the apprenticeship route.
For employers, apprenticeships can directly address skills gaps, increase productivity, support employee retention and help large and small firms better manage their workforces. Training apprentices can be more cost effective than hiring skilled staff, leading to lower overall training and recruitment costs. Companies find that apprentices tend to be highly-motivated, flexible and loyal to the business that invested in them. Apprentices themselves gain the technical knowhow and transferable work skills needed to kick-start their career.
So with unemployment rising, and more and more young people out of work, we have a serious challenge to overcome. But there are many things that the government, businesses and individuals can do by working together to help tackle this critical issue. Now is the time for action for jobs.
Sara Parker is London region director for the Confederation of British Industry (CBI).
We must take action now to avoid the scarring effects of long-term unemployment