Magazine article New Statesman (1996)

Scars for Life: The Problem of Youth Unemployment Used to Be Too Many Workers; Now, It's a Lack of Jobs. David Blanchflower Analyses the Causes of This Growing Crisis and How It Could Shatter the Hopes of Young People Today

Magazine article New Statesman (1996)

Scars for Life: The Problem of Youth Unemployment Used to Be Too Many Workers; Now, It's a Lack of Jobs. David Blanchflower Analyses the Causes of This Growing Crisis and How It Could Shatter the Hopes of Young People Today

Article excerpt

As a labour economist, I have been investigating youth unemployment for many years. Back in 2000, I co-edited a book entitled Youth Employment and Joblessness in Advanced Countries, in which experts analysed the problems facing the youth labour market. The evidence from this book--and from a great deal of more recent work--is that the youth labour market is different from that of adults. These studies also made it clear that long spells of unemployment at a young age can create permanent scars.

A number of other facts stand out. First, youth unemployment rates tend to be two to three times higher than adult rates. Second, youth joblessness is especially volatile, rising faster in a slump and declining more rapidly in a boom. Third, the size of the youth cohort matters: the more people there are chasing the jobs available, the higher the unemployment rate will be.

Before the general election in May last year, youth joblessness in Britain, having worsened during the recession, was showing signs of improvement as a result of measures introduced by Labour and paid for by a tax on bankers. But no longer. The Justice Secretary, Kenneth Clarke, spoke of the "calamitous position" that we are in. Perhaps the phrase applies to young people more than to anyone else.

George Osborne and David Cameron shake off the blame for rising youth unemployment by claiming that it has been a problem for some time and that we are still seeking an explanation for it. We are not. The answer is simple and has two different parts: for the years up to 2008, it has to do with the supply side (the number of workers); for the years since then, it is down to the demand side (the number of jobs).

Number crunch

The main explanation for rising youth unemployment between 2000 and 2008 is on the supply side. The number of youngsters between 16 and 24 increased from about 6.26 million in January 2000 to 7.36 million in June 2009. It fell back slightly in November 2010, to 7.34 million. The blue line on the graph (above right) plots the size of the youth population compared with the overall population; it rose from 13.6 per cent to a high of 14.9 per cent between June and August 2008 and has recently fallen back to 14.7 per cent. The pink line plots the youth unemployment rate, which increased steadily from 2003 to 2008. Because of the growing size of the cohort (partly the result of an inflow of young people from the EU accession countries), there were more people in the age range looking for work. The pool of jobs, however, was not growing fast enough.

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The graph shows that, since 2008, the size of the youth cohort has remained quite steady. If anything, it has begun to decrease as youth joblessness has exploded. The story for this later period is that there has been a decline in demand. As demand has collapsed, most of the workers from eastern Europe have left.

The table on the facing page sets out the changes in the youth labour market between November 2007 (before the onset of recession) and November 2010, allowing us to compare the last seven months under Labour with the first seven months under the coalition government. The data shows that the coalition has sent the youth labour market back into crisis. …

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