Friday 18 September 2020 4:41 am

Rishi Sunak's Kickstart scheme can help blunt the impending youth unemployment crisis

This week’s unemployment figures from the Office for National Statistics paint a gloomy picture for Britain’s young people. In the UK those aged 16 to 24 have been hit hardest by job losses since the economy locked down. There were 156,000 fewer young people in employment in the three months to July when compared with the same period in 2019.  

There is a clear consensus that the picture will get worse before it gets better. As furlough has started to wind down, the data has shown unemployment increasing. Looking ahead, The Institute for Public Policy Research has even warned that youth unemployment could hit 1m by the end of 2020, surpassing levels seen in the 2008 global financial crisis.

Read more: Government urges firms to hire under-25s through free ‘kickstart’ scheme

That previous recession is a relevant reference point for other reasons. We also know that in the years that followed, young and disadvantaged people bore the brunt of economic turmoil. That reality is unfortunately repeating itself, and more acutely this time around. The deeper economic impact from Covid-19, and the reality that these same groups will take the biggest hit, combine to paint a scary picture. 

Clearly then, urgent action is needed to prevent us from losing a generation of talent to the pandemic. Enter, Rishi Sunaks’s new £2bn Kickstart scheme for Britain’s 16 to 24 years olds that will see the Treasury paying wages for six-month work placements. Here the government has begun to lay the foundations of a powerful solution, providing high hopes hundreds of thousands of jobs could be created.  

Most will agree that surging youth unemployment must be halted and will testify to the same goals as the Kickstart scheme – not just for the sake of the careers and health of an entire generation, but for the UK’s wider economic recovery too.  

Yet, whilst the government can legislate and fund this ambitious move, there is certainly a role for businesses themselves to play in maximising its impact and reach.  

Firstly, the country’s largest businesses have been encouraged to apply directly to the government, to launch work placement opportunities at scale. For Britain’s smaller firms, or those wishing to offer less than 30 placements, the government is relying on a different mechanism. That requires employers to group together, or to work with organisations that are willing to step forwards to act as aggregators, to pool job vacancies. 

The success of Kickstart now seems heavily contingent on the effectiveness of that mechanism, and will hopefully spark a wave of collaboration that maximises the volume of work placements offered. 

It is also important to note that work placements and full-time jobs are very different things, both for the individuals involved, and for long term economic impact. With the Kickstart scheme there is a genuine opportunity for employers not to simply fill the subs bench, but to create jobs of the future and provide the hands-on training that will help young people meet the demands of a new-look economy.  

Forty per cent of employers say the skills shortage is the main barrier for filling entry-level jobs, and this is costing firms £6.6bn a year according to the Open University’s Business Barometer. Now is the perfect time for firms to address the skills gap in a cost-effective, sustainable manner.  

The long term social and economic impact of the Kickstart scheme will be largely determined by the conversion rate between those that enrol, and those that are offered full-time work thereafter. Six-month placements are great as a short-term measure and provide valuable income and experience. But what makes the difference is full-time employment. 

Read more: UK unemployment: Experts say job losses to jump as furlough ends

Only with that financial stability can young people look forward, sign leases, take out mortgages, and plan for the future. This will make the difference for this scheme and where it can be effective long term. Critical to achieving this will be matching candidates to the right work placement opportunities, which must be high up the agenda for all the concerned public, private, and charity sectors. 

Given the pervasive and growing levels of youth unemployment and job losses at scale, there is no silver bullet. Yet, it will be essential to call upon the entire range of stakeholders that underpin the UK jobs market. Entrepreneurs, government, charities, social enterprises can all be part of packages, like the Kickstart scheme, being implemented to keep the pipeline of employment flowing. Collaboration will be vital in opening doors where they have been consistently closing for the youth of this country.  

Michael Houlihan is the CEO of Generation UK

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.

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