Scaling the youth employment challenge

a report from the UKCES (March 2013)

Executive summary

In summer 2012 the UK Commission for Employment and Skills published The youth employment challenge. This set out the structural changes in the labour market that have made it increasingly difficult for young people to get into work and progress on a career path.

It highlighted the importance of employer practice in tackling this challenge and called for UK employers to adopt a “youth policy”: to do something, no matter how small, to help young people get into work. This includes activities like opening up recruitment practices and offering work experience or apprenticeships.

In this report we examine the extent to which UK employers are engaging in these types of activities and some of the barriers to making them more widespread. There are many excellent examples, but there is scope to do much more.

The way in which employers fill their vacancies is key. Word of mouth recruitment disadvantages young people without the right networks and contacts. But this is on the rise and is now the number one method of recruiting. Unless recruitment becomes less about who you know and more about what you know and what you can do, employers risk missing out on a rich and diverse talent pool. Use of Jobcentre Plus for recruitment has fallen in the last two years, however the recent launch of the Government backed online vacancy matching service Universal Jobmatch offers an accessible and free means for businesses to advertise their jobs widely.

The majority of employers who take on young people straight from education find them well or very well prepared for work, but they attach vital importance to experience when they recruit. And lack of experience is the number one reason why recruiting employers turn young job applicants away. It’s also the main reason they find them poorly prepared for work.

Despite the importance employers place on work experience, only one in four offer work experience placements to young people in education. Combined with decreasing opportunities to work while learning, this means that young people continue to face a ‘Catch 22’ situation. To tackle this, work experience needs to become much more widespread and seen by employers as an integral part of their recruitment strategies. Employers who provide work experience say they gain considerable benefits, so there is a strong case for others to get involved. And there is untapped demand: 20% of employers who don’t offer work experience have never been approached to offer it and many employers recruit young people without offering work experience. Our goal should be to raise the overall number participating from a quarter to a half of all UK employers.

Although the recession has caused a fall off in recruitment generally, employment in high skill managerial and professional roles has grown by over 900,000 and this growth is set to continue. Employers who specialise in these roles are the least likely to recruit young people and where they do, they tend to rely on university graduates. Creating more non-graduate routes into professional and managerial jobs would offer ladders of opportunity to young people, and feed the talent pipeline for employers. Apprenticeships offer just such a gateway into a great career for young people and bring well documented returns to employers. Yet currently, just 15% of employers have or offer apprenticeships. Twice that number say they plan to offer apprenticeships in the future, so again, we should be aiming to double participation.

In 2011 the UK Commission, supported by Government, launched a new vision for how we invest in our current and future workforce – Employer Ownership of Skills. Realising this vision through a series of significant steps would play a big part in tackling the youth employment challenge. We believe that by empowering employers and giving them far greater sway over public spending on skills, we will see innovative ideas and increased investment in return. We are encouraged by the bids from employers in the first round of the Employer Ownership Pilot (EOP) fund in England. In Round 2 we are looking for more ambitious proposals.

We know that there is significant variation in youth policy type activity by industry sector, which suggests there are sectoral solutions to youth employment. In Round 2 of the Employer Ownership Pilot, we want to encourage the establishment of employer owned and run partnerships that bring together employees, unions and training providers around common issues like recruitment, work experience and apprenticeships. These ‘Industrial Partnerships’ will take end to end responsibility for workforce development – setting standards, designing qualifications and creating career pathways in key sectors of the economy.

There is huge potential for expansion of apprenticeships, but barriers to achieving this include perceptions of lack of need, suitability and cost, and a widespread lack of awareness of the Government subsidy for training. Giving employers far greater purchasing power for apprenticeship training by funding them directly instead of channelling funding through training providers could help raise awareness of the public subsidy, and encourage more employers to get involved.

We know that the best outcomes are achieved when employers and colleges/providers collaborate, especially in opening up jobs and training opportunities and tapping into the potential for work experience in small businesses. There are great examples of such collaboration in the first round of the Employer Ownership Pilots. The UK Commission will continue to promote and evaluate this approach in the second round.

Finally, the skills system has tended to measure success by fairly narrow outputs, like qualification achievements. Shifting accountability and success measures toward labour market outcomes - earnings and employment chances for learners, for example - would further encourage employer and college/provider collaboration. This could be achieved by emphasising these outcomes in quality assurance regimes, and by tying funding to them.

Nothing less than a radical shift in approach will be sufficient to redress the UK’s youth employment problems. But as we have seen, there is huge scope to raise our game. By taking a few significant steps we can make a start towards embedding a culture where recruiting and developing young people are part of standard business practice in the UK.

Full text (PDF 22pp)

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