Youth unemployment 'a national crisis'
Updated on 17 February 2010
Official figures reveal the number of 18 to 24-year olds out of work has fallen by 13,000 to 725,000 in the last three months of 2009. But economist David Blanchflower is still troubled.
Youth unemployment is a huge problem these days.
Fortunately, the number of those under the age of 25 who are actually counted as unemployed has not passed the million mark - but it still could, especially when the class of 2010 leaves schools and universities in the spring.
In large part the fact that the numbers of young unemployed have not hit the magic million, is because of action taken by the government.
Every 18-24 year who has been out of work for six months or more is now to be offered a job or a work placement.
The government is also providing a place in education or training for every 16 or 17-year-old. A number of the measures to assist the young unemployed are being paid for by a one-off tax on bankers' bonuses. The vast majority of people polled subsequently said they supported the tax.
The Prince's Trust conducted a survey of 2,000 young people in December 2009. In comparison with other young people the young unemployed were found to be significantly more likely to feel ashamed, rejected, lost, anxious, insecure, down and depressed, isolated and unloved. And many reported having suicidal thoughts.
Youth unemployment hurts
Youth unemployment is especially troubling given that its effects continue into adulthood in a way that spells when older do not.
Youth unemployment creates permanent scars. It lowers wages, and increases the chances of being unemployed in adulthood.
Recent work also suggests that even youngsters who choose to go to college or university are hurt if they enter the labour market in a recession. Lifetime earnings are substantially lower than they would have been if the graduate had entered the labour market in good times.
Recent research also suggests that youngsters who grow up during recessions tend to believe that success in life depends more on luck than on effort, so recessions are de-motivating.
It doesn't help that the size of the youth cohort is simply bigger than it has been for at least a decade and is bigger than the cohorts that will follow it.
There are simply a lot of young people arriving onto the labour market in the midst of a recession and there aren't jobs for them.
In a recession, going to university or college is especially attractive because there are fewer alternatives on offer. There has been a huge increase in the number of applications to go to university.
Applications to UCAS were up by 6.3 per cent this time last year but are up 24.4 per cent this year. In part this is because there were large numbers who applied last year, couldn't find places and applied again this year. Nursing, for example, saw an increase in applications this year of 74 per cent.
But the number of places on offer has been cut and universities are being fined if they take more students. This makes no sense. It is better to have young people in education than on the street. We need more university places not less.
A real possibility remains that these youngsters who entered the world of work in a deep recession will become a lost generation. This is a national crisis.
David 'Danny' Blanchflower is Professor of Economics at Dartmouth College and the University of Stirling. He was a member of the MPC from 2006-2009. He is a columnist at the New Statesman and Bloomberg.