Causes of Unemployment in Young People in the UK - Case Study Example

Chapter summary Lord Digby Jones in an interview with BBC recommends two young men to stop exploiting the benefits endowed to them and start working.However, Lord Jones should realize that Britain is not really running on lazy men like he professes it to. Young people are at the mercy of Government policies and have been reduced to be guinea-pigs in the economic reforms being done by the policymakers in Britain. Britain has been hard hit by recession. In the period April 2008 to October 2009, the numbers of benefits given to the unemployed have doubled. The young work force in Britain has been severely compromised by these hard hitting times. Case can be made of Vicky Harrison a qualified and brilliant student, who after applying and getting rejected over 200 times took her own life in depression. This news caused quite a furor across Europe. Although the GDP has outgrown any other G7 nation, it is interesting to note that as per a survey by the National Statistics report that during recession, the jobs offered to people between 50 and retirement age increased by 225,000. Not only that, they were also offered the cream of the job, with the younger people offered basic and low paying jobs. Under Thatcher, it is reported that UKs economy surged ahead, she led the way by example to the other European Nations. Thatcher encouraged self-employment by cutting the top tier of Income Tax from 80 to 40 percent. Thatcher laid her confidence on the people rather than the government to decide the value of commodities and services prevailing in the industry. However, her policies have been given undue credit. Her attempts to control inflation resulted in over 3 million jobs lost, with one in thirty-two applicants getting a job and what was worse that the inflation continued to increase. John Major too has continued to encourage privatization and deregulated the markets extensively. Tony Blair and Gordon Brown have followed suit. Although Blair promised that education would be a priority in his government, it has resulted in Students paying for their own tuitions, which is comparatively the highest in the world. This resulted in students incurring huge debts even before they graduated. Moreover, as the students lack relevant experience in industry, they were not getting jobs. In order to get good jobs, they had to take up unpaid internships to get a foothold in industry. The demand and supply forces are at work in the labor market of UK. As more people are unemployed, it creates a ‘labor surplus’ which leads to lower wages. Even the government’s policies on minimum wages are being constantly flouted. There is widespread unemployment and thus benefits have to be handed out. The fact that Britain has 3.7 million immigrant workers also doesn’t help the Nations cause. (Howker, E. and Malik, S. 2010 Chapter 2) Youth unemployment in 10 countries around the world Country Total Youth Unemployed (Age 15-24) Male/Female Unemployment. (15-24) Economy Growth Rate Literacy work force USA 17.6 18.7/15.7 1.7 99 153,600,000 UK 18.9 22/17.7 0.7 99 31,730,000 India 10.5 9.8/11.5 7.2 61 487,600,000 Japan 9.1 8.9/7.1 -0.7 99 65,930,000 Brazil 17.8 13.9/23.1 2.7 88.6 104,700,000 Chile 22.6 15.2/21.1 5.9 95.7 8,099,000 Turkey 25.3 17.1/20.7 8.5 87.4 27,430,000 Zimbabwe 7.6 7.6/7.6 9.3 90.7 3,856,000 South Africa 48.2 45.4/55 3.1 86.4 17,660,000 china 6.5 NA/NA 7.8 95.1 798,500,000 In the above-mentioned table, data has been taken from Index Mundi [online] The table above represents ten countries chosen from different Geographical Locations around the world and also incorporates Low Medium and High income Economies. The unemployment figures are in percentage (within the demographic age group of 15-24 year old individuals). The Growth Rate of the Economy is in terms of the Real GDP Growth Rate. Literacy is the percentage of literate adults in the respective country. Work Force is the Total Work Force Available in the country for Employment Key Interpretations: Variations in Gender: As we can see from the chart above, the more developed countries such as USA and UK have lower levels of female unemployment to male unemployment, compared to lesser developed economies such as Brazil or Chile. The exception here is Zimbabwe, which has an equal male to female unemployment. Trends from Economic Growth: The Graph above shows us the relationship between Economic growth and youth unemployment. Generally it is seen that a higher level of economic growth can see a lesser level of unemployment especially among the youth. It is clearly demonstrated by countries such as India China & Zimbabwe, where higher levels of growth in the economy create more employment. Developed economies like UK USA and Japan are expected to have slow economic progress now (Japan being negative in terms of real GDP growth rate) and unemployment levels are thus higher. South Africa has the highest unemployment in young individuals, one of the factors could be the slow economic growth in the country. Literacy and Youth Unemployment: Generally, as the Literacy rate is seen to be higher in the country, the unemployed youth level is smaller. The exception to this case being India here, where despite a poor level of literacy, the unemployment level is considerably less than countries such as UK and USA where the literacy level is 99%. However, we need to examine the quality of jobs available in India vis-à-vis US and UK to get a clearer picture. Workforce Available Youth Unemployment [The inner circle represents the Unemployed youth and the outer circle represents work force available] The above chart shows us the available work force and the respective youth unemployment. Countries such as China and India have a huge available labor force with lower levels of unemployment in the youth whereas UK has a much smaller labor work force available and a corresponding high unemployment level in the young. Causes of Unemployment in young people in UK: The problem of youth unemployment globally does not show any signs of letting up. (Barnes 2013). According to International Labor Organization, this crisis is set to continue till 2018. (Tarvid and Ernst 2013). Furthermore, the ILO reports that the youth face trouble after graduating from school to find work suitable for their qualification. Furthermore, the time to find a job after graduation and to find a different job after leaving their current jobs both has substantially increased. (Tarvid and Ernst 2013, p. 8). Some of the causes outlined as per the ILO report may be as follows: Experience Trap: Many jobs require a minimum experience in terms of work years in the relevant industry/field. As the graduates have no direct work experience as they are fresh out of school, they cannot apply for these jobs. (Tarvid and Ernst 2013, p. 8) Job Retention: Younger people often switch jobs in the hope of finding better prospects. This leads them to change jobs more often than their older counterparts. This makes their chances of finding suitable work lesser. Moreover, in times of adversity, it is reported, that younger people are more likely to get laid off than their older, more experienced colleagues. This is because the organizations they work for have had little or no investment in their training and hence, find them easier to dismiss than the workers who have been in the organization for a greater passage of time. (Tarvid and Ernst 2013, p. 8) Loss of Motivation: Youth who are uneducated or are without proper training or unskilled tend to give up on their chances of finding a job during economic crisis. (Tarvid and Ernst 2013, p. 8) Gender: There is a segregation of ‘male’ and ‘female’ jobs especially in Middle Eastern and South East Asian countries. Moreover, ‘female’ jobs are fewer in comparison to ‘male’ jobs and the pay is also reportedly lesser. (Tarvid and Ernst 2013, p. 9) Skills: Young people with lesser education/skills and work experience are more likely to be unemployed than the skilled work force. Even if the uneducated do find jobs, the quality of the jobs shall be poor. The exceptions to this scenario are countries in the Middle East and the Northern part of Africa, where a higher number of educated people are in need of jobs than the lesser educated ones. ((Tarvid and Ernst 2013, p. 9) Economic & Social Background: People coming from the lower end or less privileged segment of society are more likely to find poor or no jobs (Tarvid and Ernst 2013, p. 10) Ethnicity & Migration: In some countries there are certain biases towards immigrant works. There are legislatures that prohibit or curb employment of migrant workers. Moreover, owing to cultural biases indigenous young people are less likely to be hired. For example, in USA the level of unemployment amongst the Native Americans (American Indians) is much higher than the rest. (Tarvid and Ernst 2013, p. 10) Handicapped and People infected with HIV: The ILO reports that there are many disadvantages for employment when it comes to handicapped and disabled people. Some specific jobs require the use of several or all limbs, disabled people with their handicap thus are not suitable for the job. In USA, the unemployment group of disable young people was estimated at about 21% in 2009. It is 15% higher than the general unemployment rate of young Americans, estimated at 17%. Earlier, people with HIV were discriminated against and not given equal job opportunities. This is declining worldwide, however it still exists. (Mabry and Sharplin 1986 p.2-4) Technological Innovation: As the production process gets more technology (meant machine) dependent, industry lays off workers in search of better marginal costs. Industries today are moving from Labor intensive to employing capital intensive resources. For example, robotics has helped automobile makers to replace manual labor. Machines are capable of doing the work of ‘ten men combined’. It may reduce overall costs, but this too is a reason of unemployment. (Mabry and Sharplin 1986 p.2-4) Training and Support to combat unemployment ? “Employment minister Chris Grayling has announced a mix of training, work experience and a guaranteed interview to tens of thousands of unemployed people over the next two years, targeted at the under-25s”. (Graduatefog 2011) In a report conducted by Joseph Rowntree Foundation, entailed the work of prospective workers in “the UK labour market in 2010–11. It focuses on young jobseekers with limited education and skills, and particularly on those from disadvantaged neighborhoods. The research covers three areas of the UK with varying levels of unemployment. It explores the availability of jobs and the number of jobseekers. It reports interviews with employers and young jobseekers. It also reveals the results of a unique experiment involving over 2,000 applications by fictional candidates to real jobs.” (Tunstall et al 2012) The main findings of the research were as follows: The recession has affected job supply in all areas. Intense competition means advertised jobs can be filled within days or even hours. Even well-qualified candidates can face repeated rejection. Jobseekers without constant access to the internet are at a disadvantage. Good local intelligence is vital. [Source: JRF Report: Disadvantaged young People looking for work A job in itself?] However, in a separate Research into Training for Young Adults Aged 19-24 who are NEET (Not in Education Employment or Training) it was reported that training had a positive motivational impact on the trainees. Early signs of progressions have emerged, with about a third of the respondents to the research indicate they had found some kind of employment or internships. Some had decided to pursue further or higher education, or found some kind of Voluntary work. (McCrone et al 2013 p.8) Some similar and other strategies have been implemented across Europe. Some have been successful, some not. Young people feel they are being made guinea pigs for these policies. Although these policies are aimed at making sure that current students have a shot at good careers when they graduate, it is being reported by many young people that this policy feels like a trap and it discourages companies from giving long-term contracts to these young people. (Giles 2012) Support for the youth in education or employment/training is not that simple. There cannot be uniformity in this approach. There needs to be some economic motivation behind this strategy. Apart from theoretical, practical and paid learning approach should be employed. Incentives should be made available to organizations for increasing their level of employment, particularly the young.(Nelson and ODonnell 2012) Some sort of an economic stimulus package should be made available to the employers say in form of tax reliefs, and training benefits so that companies may employ and train young people. (Graduatefog 2011) Nature of Jobs available for Young People in UK: The nature of jobs available for young people depend on if they are studying part-time or full time or not studying/left studies. It was reported in 2011, that full time students could expect to fill ‘Elementary Positions’ at work two times more than those who had left studies. The figures indicate 38% and 19% for full-time students and dropouts respectively. Elementary positions include low or unskilled jobs such as waiting tables, cleaning jobs etc. 38% full time students got jobs in Sales and Customer Service compared to 18% dropouts. These jobs include ‘Sales Assistants and Cashiers.’ Young people who are still studying and can work part-time generally have to focus on their education more than their careers, hence the jobs available to them would only be such that offers low income that barely supports their education. Students who have left their education are more likely to find a variety of jobs as they can potentially concentrate on their career. Jobs are further available in the marketing industry, Financial Sector, Realty, or education and health services. (ONS 2012 p.3) the chart below gives us a range of the type of jobs available to such young people. References: Barnes (2013) Young and jobless forever: What do the numbers tell us? BBC retrieved on March 5 2014, available at http://www.bbc.com/news/business-24708170 Giles (2013) Soaring youth unemployment stokes fears, Financial Times retrieved on March 5 2014 available at http://www.ft.com/intl/cms/s/2/b9990f16-c43f-11e1-9c1e-00144feabdc0.html#axzz1zlMQH67q Graduatefog (2011) what should be done about youth unemployment? retrieved on March 5 2014, available at http://graduatefog.co.uk/debate-2/youth-unemployment-solution/ Howker, E. and Malik, S. (2010), Jilted Generation: how Britain has bankrupted its youth, Chapter 2 London: Icon Books. Mabry and Sharplin (1986) Does More Technology Create Unemployment? Cato Institute Policy Analysis No. 68 McCrone et al (2013) Research into Training for Young Adults Aged 19-24 who are NEET Research paper number 95, Department for Business, Innovation and Skills, United Kingdom. Nelson and ODonnell (2012). Approaches to Supporting Young People Not in Education, Employment or Training: a Review (NFER Research Programme: From Education to Employment). Slough: NFER. Oesch (2010) What Explains High Unemployment among Low-skilled Workers? Evidence from 21 OECD Countries. European Journal of Industrial Relations ONS (2012) Young People in Work, 2012 Office for NATIONAL STATISTICS UK, Index Mundi (2012), Unemployment, Data Collected from Index Mundi available at http://www.indexmundi.com/g/r.aspx?v=2229 Tarvid and Ernst (2013) GLOBAL EMPLOYMENT TRENDS FOR YOUTH 2013 A generation at risk International Labor Organization (ILO) Tunstall et al (2012). Disadvantaged young People looking for work A job in itself? Joseph Rowntree Foundation (JRF) Read More