The U.K. government will push a large-scale employment program to tackle the chronic youth unemployment problem. Paid jobs will be offered to young people who have received welfare benefits while not participating in education or work for more than 18 months, and those who refuse job offers are expected to face sanctions such as benefit cuts.
According to the Financial Times (FT) on the 28th (local time), U.K. Chancellor Rachel Reeves announced a policy to provide paid jobs for young people in a speech at the Labor Party's national convention that day. The policy centers on offering jobs to young people among recipients of Universal Credit—the U.K.'s integrated social security benefit—who are in a so-called "resting" status after neither working nor looking for work for more than 18 months.
The government says this measure is a key component of the Labor Party's "Youth Guarantee" initiative. The Youth Guarantee initiative is a system that assures those ages 18 to 21 one of the following: ▲ university education ▲ apprenticeship ▲ job, and it is known to be on pilot operation in some parts of the U.K.
FT reports that currently 1 in 8 young people ages 16 to 24 in the U.K. are NEETs (Not in Education, Employment or Training), excluded from education, employment, or vocational training, and this share has risen by more than about 30% over the past 4 years.
Minister Reeves said, "We will not leave the younger generation stranded in hopeless long-term unemployment," adding, "We will not deprive them of the dignity, stability, and ladder of opportunity that quality jobs provide. The government pledges the 'abolition' of youth unemployment." Pensions Secretary Pat McFadden also stressed that "they must accept the education, apprenticeship, or job offered."
Funding sources and detailed operating methods related to the system will be disclosed in the budget to be announced on Nov. 26. The government plans to allocate program funds directly, and will later finalize and implement whether the government will pay wages directly to young people or provide subsidies to employers.
Earlier this year, the U.K. government allocated £3.8 billion (7.1527 trillion won) for a job support program for people with chronic illnesses and disabilities.
However, labor unions and business groups have called for more fiscal input. The Trades Union Congress (TUC) argued for reviving a job guarantee program of £1 billion per year similar to those run during the financial crisis and COVID-19, and the British Chambers of Commerce (BCC) also urged the government to provide subsidies to corporations to spur hiring by small employers. They worry hiring appetite could weaken as National Insurance burdens rise and a new employment bill is introduced.
Past policies implemented with similar intent are resurfacing, highlighting their limits. For example, prompted by the 2008 financial crisis, the U.K. government introduced the Future Jobs Fund in the following year to provide jobs or vocational training when young people ages 18 to 24 received jobseeker's allowance for more than six months, but it halted the program the next year due to expense issues.
The government's failure to specify wage levels, job types, and the scope of employers is also under scrutiny. Some say the government should clarify whether injecting public funds will actually create new jobs, or merely compensate previously excluded low-wage jobs.
Rain Newton-Smith, chief executive officer (CEO) of the Confederation of British Industry (CBI), the U.K.'s largest business lobbying group, said, "Solving youth unemployment is a matter that must be treated with gravity from an economic standpoint," while adding, "We will await concrete implementation plans that do not fuel rises in employment expense and do not dampen corporations' willingness to hire."
Simon Wolfson, chairman of retailer Next, also said, "The labor market has already been on a worsening trajectory recently," adding, "Creating jobs for young people will not be easy."