Youth jobs crisis to cost economy almost £7bn

The Prince’s Trust and the Learning and Work Institute have warned that young people will increasingly bear the brunt of the unemployment crisis.

The study shows how, while some areas of the economy might begin on the road to recovery, young workers are under-represented in these sectors, and the industries that typically employ young people will be hardest hit in the long term.

Based on new labour market analysis and surveys with employers and young people, the report also warns that the pandemic will continue to exacerbate pre-existing inequalities.

The two organisations found that the economic cost of higher youth unemployment in terms of lost national output is forecast to be £5.9 billion in 2021, rising to £6.9 billion in 2022. Additionally, the fiscal cost of higher youth unemployment, in the form of lower tax revenue and higher benefit spending, is forecast to be £2.5 billion in 2021, rising to £2.9 billion in 2022.

Together, it means that the long-running scarring cost for young people entering the labour market in 2021 alone is forecast to be £14.4 billion over the next seven years.

Stephen Evans, chief executive of Learning and Work Institute, said:

"Young people have been at forefront of the coronavirus jobs crisis. While we are hopefully slowly emerging from the worst of the pandemic, the legacy will be with us for years to come in the form of higher youth unemployment. This is not just bad for young people. It will have a huge hit on our economy and our public finances, and it risks a long-lasting scarring impact on those affected.

"If we are to tackle the looming youth jobs crisis, the Learning and Work Institute believes the government must work with partners to urgently roll-out a ‘Youth Guarantee’ to support young people to access a job, an apprenticeship, education, or a high quality training opportunity."