“Never complain of that which it is at all times in your power to rid yourself”.
The words of Adam Smith in his Theory of Moral Sentiments should be the title of the government’s strategy to save young people from the unemployment crisis. Of course, some may argue the government wasn’t that far off recently with the much-derided job advert for “Fatima the ballet dancer” to re-train in cyber security. But while the advert was crass, the sentiment of positive change was not. Young people need to invent their way out of this crisis.
The most recent round of ONS employment data told us that around 1 million people have already been laid off, 25% of whom are self-employed. This is likely just the tip of the iceberg given the government protections currently in place.
Last week, a new report was launched by the Resolution Foundation, telling us that 19% of those aged 18-24 years old who were furloughed in March are now unemployed, meanwhile only 43% of those who were unemployed in March have managed to find new sources of employment. Basically, the job market is dire, and it is affecting young people the most.
Looking at the most recent ONS data for economically active people who are unemployed, 16-24 year olds sit at a sizeable 13%, much higher than the UK average of just over 4%. As the furlough scheme transitions into the less generous job support scheme, we should expect that number to be rising yet again when the latest NEET figures are announced later in November – that is to say those “Not in Education, Employment or Training”.
For any young person grouped as a NEET, life will feel pretty hopeless. Understandably so. And it’s not helped by the current government strategy predicated on simply maintaining the status quo. Help people to stay in their jobs, just with less cash in their pockets. Survive another couple of months and hope things get better. When the truth of the matter is that we’re witnessing structural sectoral change. The harm is not universal, which means the solution cannot be so.
While the latest intervention from the Chancellor is more targeted towards those sectors hardest hit, such as hospitality, the longer-term vision for recovery needs to be much bolder for young people. The impetus behind the kick-start scheme to incentivise employers to keep hiring young people is fine in the short term, but it cannot be trusted to solve the unemployment crisis – hanging on for dear life won’t do.
Sign up for our FREE Reaction Weekend Email
Read the week's best-read articles on politics, business and geopolitics
Receive offers and exclusive invites
Plus uplifting cultural commentary
This gets me to the central point of Smith’s thesis: it is within the government’s power to create transformational change. It is not enough to simply revert to the status quo in a world that has evolved in leaps in the space of a few months. The transformation has been most prominent through the adoption of digital technology, radically changing accessibility to education, development and e-commerce. The high streets may be closed but consumer spending in many categories is returning to near pre-Covid levels. People are adapting to the “new normal”.
Earlier on in the crisis, as part of the Youth Employment Group, The Prince’s Trust helped by around 70 other organisations, suggested a range of bold proposals to inspire innovation and employment, not simply to protect existing jobs. It’s time for these proposals to be revisited.
The government should establish a weighty and internationally competitive central resource of grant and loan funding to foster entrepreneurship across the country, allowing young innovators a pool of start-up capital to create growth. To aid this, a campaign should be launched to promote entrepreneurship, including mentoring and services like legal support and HR, both of which are daunting obstacles to young innovators. Through the existing local enterprise partnership framework in England, as well as the devolved administrations across the UK, the government already has the route into local communities, it just needs a multiple of investment capital.
For all the money that has been spent on shoring up businesses in the short term and the questions of ongoing forbearance, would we not also like to see capital being directed at young people and their ideas? Trust in our own ingenuity? While the cost of servicing debt remains at record lows, money should be spent on growth and not just plasters.
As the pleasingly optimistic Bank of England Chief Economist, Andy Haldane, recently remarked:
“What often then emerges is a ‘popular narrative’. These narratives have been found to be an important driver of collective behaviour in financial markets and the economy… At times of stress, a global game of Chinese Whispers can generate unduly negative expectations. I think the prevailing popular economic narrative, among businesses and households currently, is unduly negative”.
As a country we’re at a crossroads, whether it be protecting jobs or examining school children. Consequently, we’re on a path of perpetual inequality – be it measured by age, region or background – unless a new path is chosen. The government should create a culture change towards entrepreneurship, from the teaching syllabus in schools to providing capital for risks to be taken. In partnership with business and organisations like The Prince’s Trust, the platform is there for young people to prosper.
If Adam Smith, writing in 1759, can establish a theory of courage that stands the test of time, then we should expect the same of ourselves now. Or the numbers of those unemployed will keep on growing and despair will drown us all.
Chris Sibbald is Chair of The Prince’s Trust’s Global Leadership Lunch and Managing Director at Finsbury.