ECONOMISTS tell us that the worst may be over. After a double-dip recession, unemployment is dropping, the FTSE has made a confident start to the year, banks are showing an increased willingness to lend, there are indications of life in the housing market, and there are some signs of growth.
But even the most optimistic are predicting that 2013 will be tough. A weak economy continues to frustrate Britain’s deficit reduction strategy, and – faced with uncertainty – many businesses are sitting on cash rather than investing.
This makes it all the more vital for a coordinated investment programme by government and business in young people. One research organisation forecasts that youth unemployment will rise to more than 1m in 2014. There is concern that the UK will lose an entire generation of talent.
A good start has been made. The coalition has announced a £1bn youth contract to help young unemployed people get a job. It aims to provide nearly 500,000 opportunities for 18-24 year olds, including work experience placements. Labour has also announced a youth jobs taskforce, comprising an alliance of entrepreneurs, academics and trade unions to tackle unemployment in Britain’s 10 worst-hit areas.
But it’s up to business to respond. A number have announced apprenticeships schemes. At KPMG, we’ve taken on 650 graduates, and a further 150 non-graduates in other schemes, including through a six-year programme in which school leavers are provided a university education combined with accountancy training.
But, critically, any strategy to give opportunities and jobs to young people must be built on encouraging better social mobility. The former Labour minister Alan Milburn has found that teenagers from the richest 20 per cent of households are seven times more likely to go to a top university than those in the poorest 40 per cent. This is not sustainable. Business benefits from being able to recruit from a wider talent pool, and this is especially true in the professions.
Importantly, university isn’t for everyone. For those who choose not to enter higher education, unless business steps in and helps people to develop their skills, there’s a danger that they won’t be able to enter the job market at all.
The key issue is employability and ensuring that young people acquire the skills they need to get the new jobs as they are created. The Parliamentary Business, Innovation and Skills committee rightly highlighted that, despite the government’s £1.2bn investment in its apprenticeship programme last year, employers, government and schools must be more ambitious in delivering higher and advanced apprenticeships, while reducing complexity to make these programmes more efficient.
Even in a downturn, investment in young people is essential. Failure to unlock the potential of the current generation could damage our economy for generations to come.
Simon Collins is chairman and senior partner at KPMG.