The UK Youth Job Market Crisis: A Perfect Storm of Covid and Tax Hikes
For the first time in a decade, young people are struggling to find work at an unprecedented rate. The jobless rate for those between 16 and 24 has skyrocketed to 15.3%, with many experts attributing this surge to the lingering effects of the COVID-19 pandemic.
The economic landscape has not helped, as inflation remains sticky, borrowing costs have risen, and consumer demand is subdued. This has led employers to become increasingly hesitant to hire new staff, particularly in entry-level roles that young people typically occupy. As Sanjay Raja, chief economist at Deutsche Bank, puts it, "the higher up you go, the bigger the opportunity cost to replace workers who firms have put more investment and training into, and who are more difficult to replace."
The recent tax hike on employer national insurance contributions (NICs) has also taken its toll. Rachel Reeves' £25 billion increase in NICs last year was widely seen as a contributing factor to the rise in unemployment. The increased rate of 15% for employers has been particularly felt by small businesses and retail workers, who often rely on part-time employment.
However, there are some carve-outs from the tax hike. Employers NICs are not charged on annual earnings below £50,270 for workers under 21 or apprentices under 25. This could provide a lifeline to young people struggling to find work in these sectors.
Artificial intelligence is also playing a significant role in exacerbating the youth job crisis. Businesses have been investing heavily in new technologies, including AI, to automate simple tasks that were previously handled by entry-level workers. While this may seem like progress on the surface, it has ultimately made many jobs redundant and further disadvantaged young people.
The COVID-19 pandemic also disrupted education for millions of students, making it harder for them to transition into the workforce. Mental health issues and disabilities have increased sharply among young people, with over a quarter of those not in education or employment struggling with their mental wellbeing.
Finally, the legacy of austerity has created a culture that is disincentivizing work for young people. With public services having crumbled and living costs increasing, many young people are feeling disillusioned with the job market. Ben Harrison, director of the Work Foundation thinktank, notes that "all of those factors taken together, it's not necessarily too surprising you've seen this rise in mental health issues since the mid 2010s."
As the UK struggles to recover from the COVID-19 pandemic and navigate its economic downturn, the youth job crisis is a pressing concern that needs urgent attention. By addressing these underlying issues and finding ways to support young people back into the workforce, policymakers can help mitigate this growing problem.
For the first time in a decade, young people are struggling to find work at an unprecedented rate. The jobless rate for those between 16 and 24 has skyrocketed to 15.3%, with many experts attributing this surge to the lingering effects of the COVID-19 pandemic.
The economic landscape has not helped, as inflation remains sticky, borrowing costs have risen, and consumer demand is subdued. This has led employers to become increasingly hesitant to hire new staff, particularly in entry-level roles that young people typically occupy. As Sanjay Raja, chief economist at Deutsche Bank, puts it, "the higher up you go, the bigger the opportunity cost to replace workers who firms have put more investment and training into, and who are more difficult to replace."
The recent tax hike on employer national insurance contributions (NICs) has also taken its toll. Rachel Reeves' £25 billion increase in NICs last year was widely seen as a contributing factor to the rise in unemployment. The increased rate of 15% for employers has been particularly felt by small businesses and retail workers, who often rely on part-time employment.
However, there are some carve-outs from the tax hike. Employers NICs are not charged on annual earnings below £50,270 for workers under 21 or apprentices under 25. This could provide a lifeline to young people struggling to find work in these sectors.
Artificial intelligence is also playing a significant role in exacerbating the youth job crisis. Businesses have been investing heavily in new technologies, including AI, to automate simple tasks that were previously handled by entry-level workers. While this may seem like progress on the surface, it has ultimately made many jobs redundant and further disadvantaged young people.
The COVID-19 pandemic also disrupted education for millions of students, making it harder for them to transition into the workforce. Mental health issues and disabilities have increased sharply among young people, with over a quarter of those not in education or employment struggling with their mental wellbeing.
Finally, the legacy of austerity has created a culture that is disincentivizing work for young people. With public services having crumbled and living costs increasing, many young people are feeling disillusioned with the job market. Ben Harrison, director of the Work Foundation thinktank, notes that "all of those factors taken together, it's not necessarily too surprising you've seen this rise in mental health issues since the mid 2010s."
As the UK struggles to recover from the COVID-19 pandemic and navigate its economic downturn, the youth job crisis is a pressing concern that needs urgent attention. By addressing these underlying issues and finding ways to support young people back into the workforce, policymakers can help mitigate this growing problem.
back in my day we didn't have all these fancy AI things that automate jobs. I remember when I was trying to get a job, it wasn't that hard. We just had to show up, be willing to work hard, and people would give us a chance. Nowadays it's like they're trying to keep young people out of the workforce on purpose 
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It's that all these experts are talking about how hard it is for young people, but nobody's saying anything about the real problem: mental health issues and disabilities. I mean, have we become a society where we're just accepting of people being depressed or anxious all the time? 
That's not right.
I'm literally livin' in a world where my mates are goin' through depression & anxiety 'cause they can't find work 
15% unemployment rate for 16-24 is insane! 
It's not just the tax hike, it's all these other factors like AI takin' over jobs, poor education system, and austerity culture. We need policymakers to get their act together & sort out some solutions ASAP 
I mean its like theyre trying to push young ppl out of the workforce with all these tax hikes and AI taking over jobs 
small businesses are getting squeezed too its not just about the £25 billion increase in NICs it's about the ripple effect on entry level roles 
we need to talk about the education system and how its failed a lot of young ppl 
mental health is such a big issue too its like theyre already struggling and now its even harder to get a job 
. The lingering effects of COVID-19 on education and mental health are having a huge impact on young people's ability to find work. I mean, we all know that the pandemic was tough on everyone, but for young folks, it's been like, they're still trying to figure out who they are and what they want to do with their lives, right? 
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. It's like, what happens to all those young people who need jobs to survive? 
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. It's not just about throwing some money at the problem or hiring a bunch of new trainers 
their future r so uncertain & it's not like they didn't do anything wrong lol just a perfect storm of covid tax hikes & automation 
AI is literally making jobs obsolete 4 them already & education is being all messed up cuz of the pandemic 
mental health issues are through the roof rn 
. And what's up with the whole 'legacy of austerity' thing? Like, isn't it time we invested in our youth again? 
The 50k threshold for NICs is a good start, I guess... but is that just a Band-Aid on a bigger wound? 
And the AI thing just seems like employers are trying to get out of hiring anyone under 25, you know? 
so yeah lets hope gov finds a way to support those struggling with mental health issues & transition back into workforce 
we need sum sorta help n support 4 them ASAP
what's happening to our youth?! 
and AI is literally robbing them of jobs left and right 
I mean, we've got the lingering effects of the pandemic still affecting education and job markets, plus inflation is making everything more expensive, which is deterring people from spending money and thus reducing demand for jobs 
. I'm not surprised that employers are becoming more hesitant to hire new staff, especially in entry-level roles that young people usually do 
It's like they're expecting them to absorb all the costs of hiring new staff without any support.
and don't even get me started on the mental health stuff - it's just another layer to add to the whole thing.