Stark variations in youth unemployment levels across East of England


30-08-2016

There is a huge disparity in the numbers of young people being employed across the UK’s regions and cities, including in the East of England, which has the lowest rate of youth unemployment in the country at 11.2%. This compares to some of the region’s cities which have higher youth unemployment rates: Southend-on-Sea (21.7%), Luton (19.1%) and Peterborough (15.3%).

 

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 East of England had the lowest youth unemployment rate in the UK at 11.2%, lower than the UK average of 14.4%. 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.

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.

Nick Gomer, senior partner at EY across the East of England, 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, which could be further exacerbated by a period of weaker economic growth in a Brexit environment.

“Looking at the East of England, the region has a lower than average youth unemployment rate (11.2%), but what stands out are the wide-ranging variations in rates between the region’s biggest cities – with Southend-on-Sea one of the highest rates in the UK at 21.7%. 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 advanced manufacturing being one of the most important sectors for growth in the East of England. 

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.”

 

EY is a global leader in assurance, tax, transaction and advisory services. With over 400 employees in our Cambridge and Luton offices, our teams provide a range of services to a variety of sectors, including manufacturing, life sciences, consumer products and retail, technology, real estate and construction, health, and the public sector. The broad array of companies across the East allows us to bring real, relevant and key insights to our clients.

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