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Youth Unemployment

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Today's Labour Market Statistics show a worrying sharp rise in youth unemployment. The number of young people aged 16 to 24 who are unemployed rose by 15,000, to 973,000. The government's efforts to tackle youth unemployment are not working.

The government's Youth Contract is failing

The government's approach - the Youth Contract - was developed after Nick Clegg told the cabinet something must be done about youth unemployment. It has been clear for some time that it hasn't been going well. The Engineering Employers Federation reported that only 1% of their members were involved in it, and few of them had even heard of it. A survey by the Recruitment and Employment Confederation found that none of the companies contacted were using it - a worse position than when the same survey was carried out last year.

Eagerly awaited Youth Contract performance statistics were finally published on July 22. Since the launch of the policy in April 2012, just 4,690 wage incentive payments have been made - less than one tenth of what was planned. The target was for 160,000 wage incentive payments by 2015.

The Youth Contract is failing. It is a flagship scheme, but it is on course to miss its target by more than 92%. It has proved too complex for employers, and too little effort has been made to promote it. The number of young people out of work is almost a million. The government's efforts are not delivering.

Even the Chancellor - in his spending review statement in June - referred caustically to the "under-performing programmes" in the Department for Work and Pensions. The Youth Contract is clearly one of them.

Labour's alternative: the real jobs guarantee

Tackling Youth Unemployment needs a far more effective approach. It requires the commitment of employers, trade unions, government and the education system.

Our central proposition is that young people who have been out of work for a year should be guaranteed a choice of job offers lasting at least six months, paid at least at the National Minimum Wage. Once those offers have been made, the payment of Jobseekers Allowance will cease for six months. So jobseekers will need to accept one of the offers. We want every young person to have the opportunity of work, and we will require them to act responsibly and take it when it's offered.

The model for our guarantee policy is the Future Jobs Fund, which proved very effective in reducing the level of youth unemployment at the start of the recession. The current Government scrapped it after the election, but published an evaluation last year. The evaluation pointed out that the Future Jobs Fund generated a net benefit to society of £7,500 for each young person who participated; and that over half of the gross cost came back to the Exchequer in reduced benefit payments and increased tax receipts.

Reforming the wider system

Employers have a crucial role to play. In 1997, I was appointed parliamentary private secretary to the new minister of state for employment, Andrew Smith. I witnessed the establishment of the New Deal. I vividly remember employers' enthusiasm for tackling the challenge of unemployment. They knew that we are all worse off if young people spend long periods without a job at the start of their working lives, failing to develop the habits and skills of work, and finding their long term economic potential weakened as a result.

We need to enlist that enthusiasm again. Today's half-hearted initiatives have not captured the imagination of employers, or of young people. We need to do much better.

Last month, we launched the final report of Labour's Youth Jobs Taskforce. We are calling for a radical transformation in the way small businesses, schools and government get teenagers ready for work. The report highlights that:

• Careers services are becoming 'extinct' for young people; young people have no independent careers advice at a time when the world of work is changing fast;
• Schools find it tough to get young people 'job ready';
• Small business are the key jobs creator for many areas - but are disconnected from schools. The Federation of Small Businesses estimates that nine out of every 10 people who move
from inactivity to activity, move to a small or medium business.

We need to rebuild Britain's careers service, to provide access to data for each school on pupils' job outcomes and to increase employer engagement with schools - for example, by encouraging business people to sit on school governing bodies. We want young people to leave school with a plan for their future careers, whether that involves a university, an apprenticeship or a job offer.

We need to learn lessons from successful countries like Germany, where small businesses and government experts, who know all about local jobs on offer, are giving teenagers advice on what it takes to land a job before they take their options. We need to harness the power of small businesses to be the catalyst for Britain's youth employment strategy.

We need a renaissance in the apprenticeship system. Labour pioneers like Manchester are piloting UCAS style clearing houses for apprenticeships to help small businesses find the recruits they need.

Time for a new approach

The Prime Minister said after the election that the coalition would deliver "steady growth and falling unemployment". Unfortunately, he was mistaken. There's been very little growth, and unemployment is higher now than it was at the time of the election. Long term unemployment is 100,000 higher. Young people in particular are losing out.

Labour's alternative is a jobs guarantee to give hope to young people, and a radical plan to tackle the drivers of youth unemployment at it's roots. We can't wait to get on with the job of making this vision a reality.

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