Youth Unemployment

Lord Giddens Excerpts

Thursday 14th June 2012 Lords Chamber

[Lord Giddens]

My Lords, I congratulate my noble friend Lord Adonis on having secured this debate and on introducing it in such a lucid and compelling way. To quote him, I say, “Oi! I would give you a job any time”, although my noble friend has held a lot of interesting jobs.

As the noble Lord, Lord Roberts, said, youth unemployment is a gigantic problem across the world. In the Middle East and north African countries, more than 90% of young people aged 16 to 24 are not in work. A high proportion of those young people are NEETS or, as they like to say in continental countries, ninis—neither in education nor work. Ninis is a slightly more compact way of putting it. Indeed, youth unemployment was one of the sources of the Arab spring, as we know. Twenty per cent of young people in the EU are ninis and, as has been mentioned and as is very familiar, the problem is especially acute in Spain.

I ask noble Lords to remember that measuring unemployment is very complex. Sometimes it is better to measure by rates but often it is better to measure by absolute numbers, as long as you factor in population growth and so forth. It is very important to be precise about the statistics that one is using. However, these statistics clearly show that in a global society, there is a structural problem of enormous significance with potentially long-term consequences. To summarise what other noble Lords have already said, it could be said that youth today, in industrial countries and in the UK, faces a perfect storm. I will mention three factors here.

First, this recession—it may be a depression, as my noble friend Lord Wood said—is no ordinary recession. It seems, to me anyway, to be in some part a crisis of competitiveness in western countries as a whole, which will be very difficult to repair and which will demand large-scale restructuring. There are no easy options for us here any longer and the processes of reconstruction will bear heavily on young people, even if only on the “last in, first out” principle.

Secondly, as the right reverend Prelate mentioned, the older generation now has a stranglehold on resources—for example, in the housing market or, in future, pensions. My source is in some part The Pinch by David Willetts MP, an interesting discussion of intergenerational inequality. Younger people are bound to struggle in such a situation. It implies that we must have greater intergenerational equality. I would dispute to some degree what the right reverend Prelate said about early retirement ages because countries that have those, such as the southern countries in Europe, also tend to have high levels of youth unemployment while countries in the north that have a very high proportion of older people in employment, such as Finland, also have low rates of youth unemployment. Those things are not necessarily oppositional.

Thirdly, it is very important that a major part of what restructuring will involve is that fundamental changes are happening in labour markets. There is a leap in the levels of job destruction, primarily as a result of the impact of IT and automation, as has just been mentioned. The lifespan of an average medium-sized firm today is only about one third of what it was in the 1970s and therefore young people today will face a very volatile job market. For that reason, I have some reservations about apprenticeships—at least, in how they should be structured—because life skills and adaptability are likely to be as important as technical skills. We just do not know when a technical skill will become obsolete. It could happen almost overnight as it did, for example, in the printing industry some years ago.

The level of youth unemployment in this country is lower than in many other EU countries but, as the noble Lord is especially prone to say, if you measure it in absolute terms its increase is perhaps not as great as some critics argue. However, it would be a great mistake to try to normalise these statistics because young people are going to face the very demanding structural conditions that I have just mentioned. For these reasons, the crisis is too deep to be addressed simply by active labour market measures. I am not necessarily against the youth contract, the Work Programme and so forth—they are mostly continuations of new Labour policy under other names anyway—but those are really palliatives, even if a lot of money is spent on them.

I have three questions for the Minister. Macrostructural intervention is likely to be far more important but here the Government’s cupboard is worryingly bare and their policies on job generation are alarmingly weak. First, where will new net jobs come from? In this country we have, as it were, a primitive policy of deregulation which I do not think any other country in the world is following today. Surely more active collaboration between government and business is needed, as are more long-term planning and a more active industrial policy than the Government have.

Secondly, how will the Government confront inequality of a structural nature, which has a massive impact on long-term youth unemployment, and what is their position on the need to further reduce child poverty where, after all, new Labour has been pretty successful? I am in favour of a tax that would switch from the very rich to the very poor. That is a sensible and, now, a feasible idea.

Finally, the Government should be boosting numbers in higher education rather than cutting back. Countries in the southern rim—Spain and so forth—have about 40% in higher education, like us. Successful countries such as Germany or the Scandinavian countries have 53% to 60%, which has the dual function of keeping people out of the labour market and getting them into jobs. I welcome the Minister’s comments on these points.