How can we put young people back to work?

The jobs figures released this morning continue to show the UK labour market teetering on the brink. Whereas in 2012 the economy managed to create over 350,000 jobs, in the three months to March employment fell 43,000. But the picture for young people is much more complicated. The headline youth unemployment rate fell slightly in the latest data, although it remains dizzyingly high at one in five young workers. But this figure conceals a growing disparity between different groups of the youth population, some of whom are much better insulated against job losses than others.

The key is education. Despite the attention given to graduate unemployment, the group most at risk of long-term worklessness and labour market scarring is those who are not going to university. In the last three months the number of young people who are in both full-time education and work rose by 18,000. But the rise in the number of those neither in education or work is even higher: 22,000. It appears that the jobs available to young people are going to those who are also studying, rather than to the growing ranks of inactive youth.

The qualification levels of young people also matter. In the last quarter of 2012, one in four young workers with five good GCSEs, and a staggering 40 per cent of those with no qualifications, were unemployed. In comparison, the graduate unemployment rate was just 13 per cent. With no end to the UK’s labour market stagnation in sight, those young people without a degree or not on a university track face a very grim future indeed.

We need to put young people back to work. The coalition’s wage incentive scheme aimed to do this, but the early evidence suggests that it is actually doing very little to create new jobs, with only 9 per cent of employers creating vacancies as a direct result of the scheme. Instead, we should adopt a job guarantee for young people, with an offer of work experience to all those out of work and on jobseeker’s allowance for a year or more. It should be paid at the minimum wage in order to allay the justified concern with earlier "workfare" schemes. But it should also be combined with sanctions, with an obligation on the young person to take up the offer or find an alternative. This would have an immediate impact on youth unemployment in the UK, as well as providing much-needed labour market experience for many of the hardest to reach unemployed. The wage incentive scheme, on the other hand, has had the greatest impact on those closest to the labour market, who are more likely to be hired anyway and are less in need of help.

In the longer term, the UK needs a fundamental change in its school-to-work transition system, improving the routes after compulsory education for those not on a degree track. Young people do need to be equipped with the skills employers want, but also with the decent experience in the labour market that apprenticeships and jobs with high-quality training offer. The evidence suggests that there are not enough of these opportunities available to young people in the UK, with most of the growth in apprenticeship numbers being driven by over-25s.

There is an enormous proliferation of schemes attempting to re-connect education and training routes with the jobs available in the labour market. Leeds, for instance, has an ambitious target to “abolish NEETs” (young people who are not in education, employment or training) in the city, and is attempting to reach those most distant from the labour market. We have a lot to learn from how these have performed, but what we need in addition is some simplicity to the system, providing clarity to young people about the different options available to them. This would also help employers looking to hire or train young people but faced with a bewildering array of qualifications and schemes.

Similarly, the experience of other countries is informative. It has become a cliché to recommend some form of the German apprenticeship system as a solution to youth unemployment in the UK. The truth is that the UK economy does not have the institutional foundations and industrial mix that support German apprenticeships, and it probably never will. But digging a little deeper, we still have a lot to learn. For instance, local job centres in Germany have a remarkably flexible and holistic approach to supporting young people, with dedicated youth advisers assessing the needs of individuals on a case-by-case basis. They are primarily concerned with finding quality work with training or appropriate educational opportunities for young people, rather than simply pushing them into any job to get them off the books, as seems to be the case in the UK system all too often.

Our way of tackling this issue has been to devise lots of new schemes and initiatives that are of varying worth, and are not organised into a clear and easy to use system for young people or employers. Rather than continuing to apply sticking plasters, its time for a drastic re-think, applying the best insights from local areas and other countries, alongside a youth job guarantee in the short term.