Getting young into work will benefit us all

YOUTH unemployment is one of the biggest issues facing us in the Uk today. Four in ten of those out of work are aged below 25. Young workers are flexible and many are highly educated. so what can we do to get more of the younger generation into work?

in his summer Budget, the Chancellor took some important steps to help younger workers trying to get a foothold in the jobs market.

First, he announced the Youth Obligation for those on benefits. if you are aged 18-21, you will either earn or learn. living on unemployment benefit is no longer an option.

Housing benefit to this age group has also been withdrawn. This may sound harsh, but it is common sense. Why should a fit, healthy and able young person be drawing benefits when they can contribute so much to society by working or training for work?

second, the Chancellor introduced a National living Wage for over-25 year- olds. This will be set at £7.20 per hour next year and is planned to rise to over £9 by 2020.

By contrast, the current National Minimum Wage for 18-20 year olds is just over £5. For under-18s it is below £4. And for apprentices, the national minimum is below £3.

This opens up a very big labour cost advantage for younger workers. Businesses do not need to relocate to China to find lower labour costs – all they need to do is hire our well-skilled and able younger workers here in the Uk.

There will be howls of protest from those who see young people as being treated as cheap labour. But young people do not generally have families to support and they are very flexible, innovative and creative.

We should let younger workers enter the labour market at an appropriate wage rate. Their living standards will rise as they get more experience and practical skills.

Third, in the Budget the Chancellor reinforced his commitment to creating 3m apprenticeships – a workbased alternative to university education. My employer, PwC, is already supporting this programme. Hopefully many other employers will do so as well.

This is all very good. But there is much more that the government can do to help younger workers and end the stigma of youth unemployment.

First, we should exempt all workers under 25 from National insurance if their earnings are below the income tax threshold.

At present, National insurance is paid by employers and employees on earnings just above £8,000 a year. This is a long way below the income tax threshold of £11,000 a year.

The combined rate of employer and employee National insurance is 25.8pc – higher than the 20pc income tax rate. Relieving younger workers from National insurance contributions would therefore make them highly attractive to employers.

second, the ‘earn or learn’ approach to benefits should be extended beyond the 1821 year-olds to the under-25s. No under-25 year-old in the Uk should be unemployed and living on benefits.

They should be either in work or in a training programme – and the benefits system should support them in both cases, not for sitting on the sofa watching daytime TV.

in the Budget, the Chancellor started to set out a strategy for tackling youth unemployment. He wants young people to price themselves into work, and he is not prepared to support them on benefits if they are not in work-related training.

His challenge now is to build on this approach by relieving National insurance for all those under 25 and extending his ‘ earn or learn’ strategy from 21 to the mid-20s.

The Uk is a very successful economy. it continues to grow strongly and it could lead the G7 growth league once more again this year, as we did in 2014.

sharing the benefits of growth more equally in society remains a big challenge, however. The Chancellor started to address the problem of youth unemployment in his Budget – but much more can be done.