Stark variations in youth unemployment levels across SW could impact local economic growth

There is a huge disparity in the numbers of young people being employed across the UK’s cities and regions, including in the South West, which has one of the lowest rates of youth unemployment in the country (11.7%). This compares to the region’s cities which have higher youth unemployment rates: Plymouth (16.2%), Bournemouth (15.8%) and Bristol (14.2%)

According to a new report by EY in association with the EY Foundation (an independent UK charity), this could have an impact on both the region and the wider UK’s aspiration to achieve ‘inclusive growth’, particularly at a time when the UK’s future supply of labour and skills is at the forefront of many employers’ minds after the Brexit vote in June.

The report revealed that the South West has one of the lowest rates in the UK at 11.7%, lower than the UK average of 14.4%. The East of England had the lowest rate at 11.2% and the North East had the highest rate at 18.3%.

While the variations in youth unemployment between regions are significant, they’re far exceeded by those between the UK’s cities and the region they are part of. In every region, the majority of cities for which data is available had youth unemployment rates higher than their regional average. In the South West, three of the five cities analysed had rates above the South West average of 11.7%: Plymouth (16.2%), Bournemouth (15.8%) and Bristol (14.2%).

Across the UK, the report revealed an excess in the unemployment rate for 16-24 year olds. Between March and May 2016, youth unemployment rates were 28.7% for 16-17 year olds and 11.6% for 18-24 year olds in the UK.

Richard Jones, senior partner at EY in the South West, says: “Youth unemployment rates have fallen from the peaks we saw during the recession, when 40% of the UK’s 16-17 year olds were facing unemployment. However, a stubbornly high number of young people remain excluded from the labour market.

“Looking at the South West, the region has a lower than average youth unemployment rate (11.7%), but what stands out are the wide-ranging variations in rates between the region’s biggest cities – with Plymouth (16.2%) and Bournemouth (15.8%) all above the UK average (16.2), compared to Bristol (14.2%), Poole (11.7%) and Swindon (10.9%) all below the UK average. These regional differences underline the importance of a coordinated response from Government and business to tackle the issues locally as well as nationally.”

Sharp falls seen in number of young people employed in manufacturing
According to the report, youth employment levels across the UK declined by 166,000 from 2004 to 2015, with the biggest fall seen in the manufacturing sector, with a decline of 109,000 (28%) over the same period. In the last decade, construction (25%) and financial & business services (4%) have also reduced their employment of young people.

Given the announcement made by the new Prime Minister to fund an industrial strategy, it’s important that future skills development should be delivered against those target industries that support access to employment for young people – with manufacturing being one of the most important sectors for growth in the South West.

Employment growth expected in distribution, hotels & restaurants
The two sectors that currently employ the highest proportions of young people – relative to their total employment – are set to grow. The report forecasts that between 2015 and 2030 the UK’s employment in distribution, hotels and restaurants will grow by an average of 0.4% a year, matching the forecast growth of the UK’s total employment. Over the same period, the report forecasts employment growth in other services by 0.9%, strongly outpacing the average across UK sectors.

Conversely, the sectors young people are most likely to have difficulty finding employment opportunities in are mining & utilities and manufacturing. Both sectors are expected to see a fall in employment levels up to 2030 and already tend to employ fewer than average young people (9% for mining & utilities and 9.6% for manufacturing, compared to all sectors 12.8%).

Maryanne Matthews, Chief Executive of EY Foundation, an independent UK charity set up to help young people who face barriers in the labour market to find pathways into work, says: “Maturing workforces, demands for new skills in a knowledge economy, and a projected
growth in the number of high-skilled jobs over the next few years, means that the need for employers to diversify talent has become a business imperative. Flexible and dynamic businesses rely on continuously attracting new skills and experience and yet youth unemployment remains a significant problem in the UK.

“It is imperative that UK employers open their doors to invest in developing the skills of young people. By offering paid work experience opportunities to young people, this could lead to jobs in the future, reduce unemployment rates and help to address the UK skills gap. The more that employers play an active role in developing young people, the more we can help every young person to have better working prospects now and in the future.”