NEWS
12/10/2011 05:44 BST | Updated 11/12/2011 05:12 GMT

Youth Unemployment Reaches Record Levels Raising Fears Of 'Scarred Generation'

Unemployment figures have reached 2.57 million across the UK, official figures revealed on Wednesday, with record levels of joblessness between 16 to 24 year olds, as the economic downturn, combined with long term trends towards youth unemployment, saw jobless totals rise again.

With the economy showing clear signs of stagnating, experts have warned that the figures raise the spectre of a "scarred generation" of persistently unemployed, under skilled workers who will struggle to fully integrate with the workforce for the remainder of their careers. The youth jobless figures grew at twice the rate of those 25 and over, with two-thirds of the 110,000 total of additional unemployed people coming in the younger demographic.

“The labour market figures released this morning are very troubling," Ian Brinkley, centre director at the Work Foundation, said. “The fall in employment of 180,000 in a single quarter is comparable to the quarterly losses seen during the depths of the last recession.”

The total employment rate was 70.4 per cent, equivalent to 29.1 million people in work. The unemployment rate was 8.1 per cent - a total of 2.57 million individuals. The inactivity rate was 23.3 per cent, with 9.35 million inactive people aged from 16 to 64.

“While youth unemployment did not reach 1 million as feared, this seems to be a mere postponement of an inevitably grisly statistic... The very serious concern is that many of these youths will be out of work for an extended period given the persistently weak economy and current worrying outlook,” said Howard Archer, chief UK and European economist at IHS Global Insight. Archer warned that the jobless total would probably continue to rise into 2012.

TUC general secretary Brendan Barber blamed the figures on the government’s austerity measures and called for a Plan B to revive the economy.

“This is not simply the result of eurozone troubles. This unemployment crisis is state sponsored, and areas like the North East are paying a heavy price with more than one in ten people out of work,” Barber said.

The headline unemployment figures are still below the 3 million-plus levels hit in 1980s, and Wednesday’s numbers will be boosted by recent graduates and school leavers still looking for work, but behind the technical rise, there is a worrying trend towards long-term youth unemployment - defined as those out of work for more than a year - which was rising before the recession and has worsened since.

“We’ve had two bursts of this,” Professor Paul Gregg, a labour market expert at the University of Bath, said. “In 2009 and now again, in terms of job shedding focused on young people. People who lost jobs in the first one are now hitting the long term unemployment situation. The youth unemployment now relative to then... then it was all new stuff, we’re now getting sharp rises in long-term unemployment. Lots of people were losing jobs 18 months ago and they’re struggling to get back into the labour market.”

Previous recessions have shown that long term youth unemployment has longer term “scarring” effects on a section of the workforce.

“Particularly for young people, when you lose jobs, you tend to come back into lower paid work. That’s the short term stuff,” Gregg said. “But there are these long term scars, which are that people who don’t attach themselves to stable employment, experience and skills when they are younger have very bad labour market experiences well into their 30s and 40s.

“As far as we can tell, somebody who has a year’s worth of unemployment before 23 has something like 10 percent lower wages when they’re in their 30s and 40s, and they also tend to have have more broken employment and poorer mental health and wellbeing.”

While graduates who struggle to find employment early in their careers tend to find professional work eventually, albeit in lower-paid disciplines, persistent joblessness is more likely to effect young people with fewer skills and lower levels of education, Gregg said. This means that often the effects are felt most strongly in inner cities.

“A failure to attach to the labour market when young leads to long term issues. Some of the people come back, about half don’t suffer big wage penalties, but there’s a lot that don’t make that connection to the labour market and suffer long-term disconnection.”