How bad is the plight of the country’s youth? The rise in youth unemployment revealed by the ONS in its monthly labour market release on 19 January produced some dramatic quotes. Ed Miliband, leader of the opposition, raised the spectre of the “lost generation” several times in January. Here we set out three comparisons using official figures unseen in this debate that suggest the young do not deserve special attention. We’re all in this together.
After the last figures, NUS president Aaron Porter was quoted as saying that the government must do more “to ensure that we do not lose an entire generation to the dole queue”. Brendan Barber, TUC general secretary called them “grim jobless figures” and said: “With more than a fifth of young people out of work, we face a real danger of losing another generation of young people to unemployment and wasted ambition.”
Kevin Green, Chief Executive of the Recruitment and Employment Confederation, said: “The UK is in serious danger of creating a lost generation of young people who are not in work, training or education.” The sense of gloom was deepened by the news from UCAS that nearly 700,000 people applied for university courses starting last autumn and that 200,000 missed out. (See footnote.)
Anyway, we are left with the clear impression that young people are in a crisis. So just how bad is youth unemployment?
On one headline measure, that promoted by the ONS, there was a “record” high rate of youth unemployment – the latest month’s rate of just over 18% almost matched that seen for a month just over a year ago and was above the 17.8% seen back in 1993. It looks bad. But here are three other perspectives on the data.
1. Look at the numbers.
Nearly 800,000 18-24s were unemployed in the early 1990s, compared to around the 700-750,000 mark of recent months. So, in terms of actual numbers, as opposed to rates, on the same measure over the same period, the situation is not quite so bad now as it was. The chart shows this – the rate is at a high and the number line is not.
The chart also reveals food for thought for the politicians. The Labour leadership might want to note that the 18.2% peak in 2009 and the gentle edging up of the rate since 2002 – yes, for nearly a decade now it has been on the up – occurred on their watch. The Conservatives would be well within their rights to say that the problem – that they need to resolve – was created under their predecessors.
2 Be careful what rate you choose.
The ONS definition of youth unemployment rates is, to say the least, a bit odd. The rate the ONS publishes is not the proportion of youths who are unemployed. Instead, it gives us the youth unemployment as a percentage of the economically active (the employed and unemployed), excluding the so-called inactive. This is a vital if subtle difference as the proportion of inactive youths has been rising sharply for more than a decade, as tertiary education expanded. In other words, the denominator used to calculate the rate has been shrinking. This means that, if the number of youths stays the same and the number unemployed stays the same, the rate of youth unemployment will rise if more youths leave the labour market by going into education! The economy is no worse – indeed more education bodes well for the future – but the rate of youth unemployment has risen.
The chart below repeats the rate line from above but also adds a line showing the unemployed youths as a proportion of all youths. The latter is at a much lower rate – less headline grabbing – and has risen far less steeply. An unemployment rate of sub-13% and over a percentage point below where it was at the last peak is just not so sexy – despite it being a more accurate measure of youth unemployment. The widening gap between the two lines reflects the increase in youngsters going to university. If we didn’t know the ONS better, we’d think they were lobbying for the young by coming up with figures that make their plight look worse. (By the way, the ONS does not publish the figures we put in the chart. We had to request the raw data from them. And the notes on the press release do not explain this oddity arising from the rate they choose to publish.)
(The distortion-by-denominator issue is even more extreme when looking at the unemployment ‘rate’ for 16-17 year olds. The ONS published rate is 36% as roughly 200,000 are unemployed and 350,000 are in work. But nearly a million are in education and when they are added to the denominator, the rate more than halves to around 15%. Around 15% of 16-17 year olds are unemployed, not 36% as the ONS publishes.)
3 The highest rate since ………
All the figures quoted above come from the Labour Force Survey. This data is by far the best measure of what is going on in the labour market but it has existed for a relatively short time, less than two decades. Prior to that point all we have is the numbers on unemployment benefits. This is less than perfect but, for what they are worth, it is another set of figures that pours cold water on the current youth being the “lost generation”. The current level of 18-24 unemployment – around 400,000 – is nowhere near the 1 million level seen in the mid 1980s. If there was ever a generation that was going to be lost to high unemployment it was mine! The very same generation that the young are now envious of. (Again this is ONS data but not figures that are readily available in print or on line.)
Yes, the young have got it bad but it is not as bad as many might think reading the headlines. To summarise: around 3.4 million 18-24s are in work, 1.7 million are inactive (mostly in education, but not looking for work), and “just” 0.7 million are unemployed. These unemployed youths are important and deserve attention but are barely 1 per cent of the population. They are not the only people affected by the slowdown – the millions who are too sick to work and who are ‘inactive’ involuntarily deserve to be given due attention too.
(A final thought on the UCAS figures showing young people being turned away from universities. Since when was tertiary education a right for anyone who applied? And best not to point out to those worrying about the young that it was applications from the over 25s that were rising fastest and where acceptances were down!)