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Jobs for Youth Jobs for Youth
UNITED KINGDOM
Improving the performance of youth on the labour market is a crucial challenge in OECD UNITED KINGDOM
countries facing persistent youth unemployment. As labour markets become more and
more selective, a lack of relevant skills brings a higher risk of unemployment. Whatever
the level of qualification, first experiences on the labour market have a profound influence Des emplois pour les jeunes
on later working life. Getting off to a good start facilitates integration and lays the
foundation for a good career, while a failure can be difficult to make up.
Ensuring a good start will require co-ordinated policies to bring the education system
closer to the labour market, to help disadvantaged young people to find a job or
participate in a training course and to facilitate the hiring of young people by firms.
OECD has launched a series of reports on the school-to-work transition process in
sixteen countries including the United Kingdom. Each report contains a survey of the
main barriers to employment for young people, an assessment of the adequacy and
effectiveness of existing measures to improve the transition from school-to-work, and
a set of policy recommendations for further action by the public authorities and social
partners.
This report is based on the proceedings of a seminar and is published in English only.
However, a French translation of the summary and main recommendations has been
included in this volume.

Jobs for Youth UNITED KINGDOM

Already published in the same series:
Belgium
Canada
Korea
Netherlands
New Zealand
Slovak Republic
Spain

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ISBN 978-92-64-04646-7

�����������������������
81 2008 10 1 P -:HSTCQE=UY[Y[\:
 Jobs for Youth
(Des emplois pour les jeunes)

United Kingdom
 ORGANISATION FOR ECONOMIC CO-OPERATION
AND DEVELOPMENT

The OECD is a unique forum where the governments of 30 democracies work

together to address the economic, social and environmental challenges of globalisation.
The OECD is also at the forefront of efforts to understand and to help governments
respond to new developments and concerns, such as corporate governance, the
information economy and the challenges of an ageing population. The Organisation
provides a setting where governments can compare policy experiences, seek answers to
common problems, identify good practice and work to co-ordinate domestic and
international policies.
The OECD member countries are: Australia, Austria, Belgium, Canada, the
Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland,
Ireland, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, New Zealand,
Norway, Poland, Portugal, the Slovak Republic, Spain, Sweden, Switzerland, Turkey,
the United Kingdom and the United States. The Commission of the European
Communities takes part in the work of the OECD.
OECD Publishing disseminates widely the results of the Organisation’s statistics
gathering and research on economic, social and environmental issues, as well as the
conventions, guidelines and standards agreed by its members.

This work is published on the responsibility of the Secretary-General of

the OECD. The opinions expressed and arguments employed herein do not
necessarily reflect the official views of the Organisation or of the governments
of its member countries.

Corrigenda to OECD publications may be found on line at: www.oecd.org/publishing/corrigenda.

© OECD 2008

OECD freely authorises the use, including the photocopy, of this material for private, non-commercial purposes.
Permission to photocopy portions of this material for any public use or commercial purpose may be obtained from the
Copyright Clearance Center (CCC) at [email protected] or the Centre français d'exploitation du droit de copie (CFC)
[email protected]. All copies must retain the copyright and other proprietary notices in their original forms. All
requests for other public or commercial uses of this material or for translation rights should be submitted to
[email protected].
 FOREWORD – 3

FOREWORD

The OECD’s Employment, Labour and Social Affairs Committee has

decided to carry out a thematic review of policies to facilitate the
transition from school to work and to improve the career perspectives of
youth. This review is a key part of the implementation of the Reassessed
OECD Jobs Strategy.
Sixteen countries (Australia, Belgium, Canada, Denmark, France,
Greece, Japan, Korea, Netherlands, New Zealand, Norway, Poland,
Slovak Republic, Spain, United Kingdom and United States) have decided
to participate in this review which will take place between 2006 and 2009.
Once all these countries have been reviewed, a synthesis report will be
prepared highlighting the main issues and policy recommendations which
will be discussed subsequently by Employment and Labour Ministers.
In this thematic review, the term youth encompasses “teenagers”
(i.e. youth aged 15/16-19) as well as “young adults” (aged 20-24 and 25-29).
This report on the United Kingdom was prepared by Glenda Quintini,
with statistical assistance provided by Sylvie Cimper and Thomas Manfredi.
It is the eighth such country report prepared in the context of this thematic
review. A draft of this report was presented at a seminar which was
organised in London on 13 March 2008 by the Department for Children,
Schools and Families, the Department for Innovation, Universities and
Skills, and the Department for Work and Pensions.

JOBS FOR YOUTH – UNITED KINGDOM – ISBN-978-92-64-04646-7 © OECD 2008

 TABLE OF CONTENTS – 5

TABLE OF CONTENTS
List of Abbreviations ................................................................................................. 9
Summary and Main Recommendations ................................................................... 11
Résumé et principales recommandations................................................................. 23
Introduction .............................................................................................................. 39
CHAPTER 1. THE CHALLENGE AHEAD ....................................................... 41
1. Demographics and labour market outcomes ................................................. 41
2. Incidence and dynamics of youth non-employment...................................... 49
3. The transition from education to employment .............................................. 52
4. Characteristics of jobs performed by youth: stepping stones or traps? ......... 57
5. Key points ..................................................................................................... 62
CHAPTER 2. INITIAL EDUCATION AND LEARNING ON THE JOB ....... 65
1. Performance of the education system ........................................................... 66
2. Improving education outcomes through quality early childhood
education and care......................................................................................... 74
3. Combating failure in education through financial support, guidance
and remedial programmes ............................................................................. 77
4. Engaging 14-19-year olds in England through a broader spectrum
of learning options ........................................................................................ 84
5. Raising compulsory education requirements .............................................. 100
6. The tertiary education system and its main challenges ............................... 105
7. Training on the job ...................................................................................... 108
8. Key points ................................................................................................... 110
CHAPTER 3. REMOVING DEMAND-SIDE BARRIERS .......................... 113
1. Economic growth and youth employment .................................................. 113
2. Employers’ views of youth labour market readiness .................................. 116
3. Wages and labour costs ............................................................................... 117
4. The strictness of employment protection legislation
in the United Kingdom ................................................................................ 125
5. Key points ................................................................................................... 126
CHAPTER 4. PASSIVE AND ACTIVE LABOUR MARKET POLICIES
TO MOBILISE YOUNG PEOPLE INTO WORK .......................................... 127
1. The role of passive labour market measures for youth ............................... 127
2. Activation of unemployed youth ................................................................. 132
3. Reducing NEET and engaging youth at risk ............................................... 146
4. Key points ................................................................................................... 153
Bibliography .......................................................................................................... 155

JOBS FOR YOUTH – UNITED KINGDOM – ISBN-978-92-64-04646-7 © OECD 2008

6 – TABLE OF CONTENTS

List of Boxes
Box 1.1. Measuring the time needed to find a first job
after leaving education .................................................................. 55
Box 2.1. The role of early childhood and pre-school programmes
in reducing school difficulties of children
from disadvantaged families ......................................................... 74
Box 2.2. Evaluations of EMA pilots and national roll-out in England .......... 79
Box 3.1. The minimum wage impact on youth employment,
school enrolment and on-the-job training: international evidence ...... 121
Box 3.2. The role of the United Kingdom Low Pay Commission............. 123
Box 4.1. Active Labour Market Policies for youth ................................... 132
Box 4.2. New Deal for Young People: how does it work?........................ 135
Box 4.3. The New Deal for Young People: evaluations ............................ 136
Box 4.4. New Deal for Lone Parents and New Deal for Disabled People ........ 140
Box 4.5. Employment Zones Pilots ........................................................... 144
Box 4.6. The US Job Corps programme .................................................... 152

List of Figures
Figure 1.1. Share of youth in the working-age population
in OECD countries, 1975-2025..................................................... 42
Figure 1.2. Youth unemployment and employment indicators, OECD,
United Kingdom and Europe, 1984-2007 ..................................... 43
Figure 1.3. Youth unemployment and employment indicators, by gender,
OECD countries, 2007 ................................................................... 45
Figure 1.4. Low- to high-skilled youth unemployment ratio,
OECD countries, 1997 and 2005 .................................................. 46
Figure 1.5. Youth unemployment and employment indicators
for teenagers and young adults, United Kingdom and OECD,
1984-2007 ..................................................................................... 47
Figure 1.6. Incidence of long-term unemployment among youth,
OECD countries, 1997 and 2007 .................................................. 48
Figure 1.7. Share of NEET teenagers and young adults, OECD countries,
1996 and 2005............................................................................... 50
Figure 1.8. NEET dynamics, United Kingdom, 1991-96 and 2000-05 ........... 51
Figure 1.9. Persistence of non-employment status in the United Kingdom,
1991-95 and 2001-05 ..................................................................... 52
Figure 1.10. Activity status of youth aged 15-27, United Kingdom
and selected OECD countries, 2002/2005 .................................... 53
Figure 1.11. Incidence of temporary work one year after leaving education,
selected European countries, 2005 ................................................. 57
Figure 1.12. Transition rates from temporary to permanent employment
in Europe, 1996 and 2001 ............................................................. 58

JOBS FOR YOUTH – UNITED KINGDOM – ISBN-978-92-64-04646-7 © OECD 2008

 TABLE OF CONTENTS – 7

Figure 1.13. Incidence of work-based training among employees,

United Kingdom, 1998 and 2005 .................................................. 59
Figure 1.14. Destination of youth and adults in jobs without training,
United Kingdom, 1999 and 2005 .................................................. 60
Figure 1.15. Incidence of low pay and no pay, United Kingdom,
1995 and 2005............................................................................... 61
Figure 1.16. Persistence of low pay, United Kingdom, 1991-95 and 2001-05 ......... 62
Figure 2.1. United Kingdom students’ performance, based on PISA 2006.......... 67
Figure 2.2. Score dispersion on the PISA 2006 science scale, OECD countries.. 67
Figure 2.3. School drop-outs in OECD countries, 2005.................................. 69
Figure 2.4. Share of youth neither in employment nor in education
or training by educational attainment, OECD countries, 2005........... 69
Figure 2.5. Employment rates by educational attainment
in OECD countries, 2005 .............................................................. 70
Figure 2.6. Earnings distribution of adults without an upper secondary
qualification, OECD countries, 2005 ............................................ 71
Figure 2.7. Enrolment in vocational versus general education
in upper secondary education in OECD countries, 2005 .............. 72
Figure 2.8. Population that has attained tertiary education
in OECD countries, 2005 .............................................................. 73
Figure 2.9. Returns to vocational and academic tertiary qualifications,
selected OECD countries, 2004 .................................................... 73
Figure 2.10. Access to licensed ECEC services for children under three,
selected OECD countries, 2004 .................................................... 75
Figure 2.11. Distribution of apprentices across industry, 2007 ......................... 91
Figure 2.12. Gender distribution of apprenticeships in selected industries,
2007 .............................................................................................. 92
Figure 2.13. Average net weekly pay of apprentices in selected industries,
United Kingdom, 2004.................................................................. 94
Figure 2.14. Average net pay by gender, age and apprenticeship level,
United Kingdom, 2004.................................................................. 94
Figure 2.15. Apprenticeship completion rates in selected industries,
United Kingdom, 2006.................................................................. 96
Figure 2.16. Hours of training and working per week in selected industries,
United Kingdom, 2004 ......................................................................... 97
Figure 2.17. Projected participation in education and training
of 16-17-year olds, United Kingdom, 2007-2017 ....................... 101
Figure 2.18. Incidence of job-related training by duration of the training course,
United Kingdom and European countries, 2003 .............................. 109
Figure 3.1. Youth employment rates and GDP, 1985-1995 and 1996-2006 ........ 114
Figure 3.2. Youth and adult employment rates and economic cycles,
United Kingdom, 1985-2006 ...................................................... 115

JOBS FOR YOUTH – UNITED KINGDOM – ISBN-978-92-64-04646-7 © OECD 2008

8 – TABLE OF CONTENTS

Figure 3.3. Employers dissatisfied with the key skills of young recruits,
United Kingdom, 2006................................................................ 116
Figure 3.4. Employers’ views of government priorities in improving skills
and education, United Kingdom, 2006 .............................................. 117
Figure 3.5. Wage profiles of full-time workers by gender
in the United Kingdom and selected OECD countries,
1997-2006 ................................................................................... 118
Figure 3.6. Overall strictness of employment protection legislation
and its three main components, OECD countries, 2003 ............. 125
Figure 4.1. Net unemployment benefit replacement rates,
in OECD countries, 2005 ............................................................ 129
Figure 4.2. Trends in benefit recipiency in the United Kingdom,
youth aged 18-24, 1999-2007 ..................................................... 131
Figure 4.3. Sustainability of employment outcomes for NDYP leavers,
1998-2007 ................................................................................... 138
Figure 4.4. Immediate destination of young people leaving the NDYP,
1998-2007 ................................................................................... 138
Figure 4.5. Distribution of youth across NDYP options, 1999-2006 ............ 139
Figure 4.6. The reformed New Deal programme .......................................... 142

List of Tables
Table 1.1. Youth labour market indicators by age group, United Kingdom,
1987, 1997 and 2007 ...................................................................... 46
Table 1.2. Scoreboard for youth aged 16-24, United Kingdom, 1997, 2002
and 2007........................................................................................ 63
Table 2.1. Tomlinson’s Diploma Framework proposal ................................. 87
Table 3.1. Minimum wages for adults and youth
in OECD countries, 2006 ............................................................ 120
Table 3.2. Tax wedge including employers’ social security contributions
in OECD countries, 2000 and 2006............................................... 124
Table 4.1. The cost of youth activation schemes in the United Kingdom,
2005 ............................................................................................ 134
Table 4.2. Connexions Services by level of disadvantage ........................... 148

JOBS FOR YOUTH – UNITED KINGDOM – ISBN-978-92-64-04646-7 © OECD 2008

 LIST OF ABBREVIATIONS – 9

List of Abbreviations

ALMPs Active Labour Market Policies

CBI Confederation of British Industry
E2E Entry to Employment
ECEC Early Childhood Education and Care
EMA Education Maintenance Allowance
EZs Employment Zones
FD Foundation Degree
FE Further Education
FLT Foundation Learning Tier
GDP Gross Domestic Product
GBP British Pound
GCSEs General Certificates of Education
IFP Increased Flexibility Programme
JSA Jobseeker’s Allowance
LEPs Local Employment Partnerships
LPC Low Pay Commission
LSC Learning and Skills Council
MPEZs Multiple Employment Zones
NDDP New Deal for Disabled People
NDLP New Deal for Lone Parents
NDYP New Deal for Young People
NEET Neither in Employment nor in Education or
Training

JOBS FOR YOUTH – UNITED KINGDOM – ISBN-978-92-64-04646-7 © OECD 2008

10 – LIST OF ABBREVIATIONS

PISA Programme for International Student Assessment

SMEs Small and Medium Enterprises
SSC Sector Skills Council
SSCCs Sure Start Children’s Centres
SSLPs Sure Start Local Programmes
YAs Young Apprenticeships

JOBS FOR YOUTH – UNITED KINGDOM – ISBN-978-92-64-04646-7 © OECD 2008

 SUMMARY AND MAIN RECOMMENDATIONS – 11

SUMMARY AND MAIN RECOMMENDATIONS

The labour market performance of young people

In the United Kingdom, measures of youth labour market performance

and indicators describing the transition from education to work over the past
15 years paint a mixed picture. On the one hand, there is evidence that youth
labour market integration and career progression have improved considerably
since the mid-1990s thanks to a combination of specific youth labour market
measures, sound reforms of the welfare system and favourable economic
conditions. In 2007, the incidence of long-term unemployment among youth
was just 16% – 7 percentage points lower than in 1997 and 4 percentage
points below the OECD average. Upward wage mobility for youth holding
low-paid jobs also increased significantly between the early 1990s and the
early 2000s.
However, other indicators paint a less rosy picture. First, employment and
unemployment rates have deteriorated recently. In 2007, 56% of
16-24-year-old youth were employed, 5 percentage points fewer than in 1997
although 12 percentage points above the OECD average. More importantly,
the significant improvement in the youth unemployment rate achieved
between the mid-1990s and the early 2000s has partly been undone since
2004. In 2007, the youth unemployment rate was 14%, slightly above the
OECD average, compared with just 11% in 2004. These figures hide
significant differences between teenagers (16-19-year olds) and young adults
(20-24-year olds). The decline in the youth employment rate between 1997
and 2007 was entirely driven by the worsening employment prospects of
teenagers while the position of young adults improved up until 2004.
However, both age groups were affected by the recent deterioration in labour
market performance and this trend could well continue in the short term as
projected GDP growth for 2008 and 2009 is revised downwards in the wake
of the current uncertain economic climate.
Second, 13% of 16-24-year olds were neither in employment nor in
education or training (NEET) in 2005 (the latest year for which comparable
data are available), and many youth in this group are at high risk of poor

JOBS FOR YOUTH – UNITED KINGDOM – ISBN-978-92-64-04646-7 © OECD 2008

12 – SUMMARY AND MAIN RECOMMENDATIONS

labour market outcomes and social exclusion. This rate is just above the
OECD average of 12% and has increased slightly over the past decade.
Low-skilled youth are more than twice as likely to be NEET as their more
educated counterparts and there is evidence that some become trapped in
this status.
Third, while the main activation programme for young people in the
United Kingdom – the New Deal for Young People – has helped many
youth return to work, sustainable employment outcomes have proved
difficult to achieve and there are signs that the programme is no longer as
effective as in the early days. In 2007, one in five young people who found
work through the programme held a job lasting less than 13 weeks. As a
result, the most difficult clients alternate short employment spells with
benefit dependency.
The government is well aware of the challenges described above and is
taking specific actions to address them. The English education system and the
UK activation framework are currently undergoing considerable change and a
number of ambitious reforms will be implemented over the coming years. The
purpose of this report is: i) to analyse the barriers to further progress in youth
employment, particularly among the least skilled; ii) to suggest improvements
and fine-tuning to the current reform plans; and iii) to put forward policy
options to tackle issues that the current reforms do not address.

Note that most of the education system discussion here and in Chapter 2,
unless otherwise specified, relates solely to England given the different
education systems in parts of the United Kingdom.

Recent reforms

Over the past five years, efforts have been stepped up to encourage more
young people to stay on in education and training after completing
compulsory education, particularly in England. A number of measures have
been introduced to this effect, including financial support – through the
Education Maintenance Allowance rolled out nationally in 2004 – and the
guarantee of a place in an educational institution after age 16 – the
September Guarantee launched in 2007. Evaluations have shown that the
Allowance has improved beneficiaries’ attendance, retention and achievement
in post-16 education and training. The Guarantee has only just been
introduced, but it is likely to help keep youth in learning longer by ensuring
that every 16-year-old receives an offer to stay in education or training. The
Guarantee is currently being extended to cover 17-year olds in 2008.

JOBS FOR YOUTH – UNITED KINGDOM – ISBN-978-92-64-04646-7 © OECD 2008

 SUMMARY AND MAIN RECOMMENDATIONS – 13

In 2003, new services for advice and support to 13-19-year olds –

Connexions services – were rolled out in England. Connexions were given
the double mandate of providing advice and guidance to all 13-19-year olds
and of helping youth at high risk of marginalisation in this age group.
Notably, they play a key role for 16-17-year olds who are NEET and are not
entitled to the financial support or re-employment services that their older
counterparts receive from Jobcentre Plus – the public employment service.
In 2006, the role played by Connexions for at-risk 16-17-year olds was
strengthened by the launch of Activity Agreement pilots in eight areas. This
new scheme mimics the mutual obligations approach applied to older
unemployed youth and, if successful, could inform the future activation
strategy for this specific age group.
In 2005, the English administration also launched an ambitious
programme – the 14-19 Strategy – aimed at broadening learning options to
ensure that every young person finds a learning pathway that suits him/her
beyond compulsory schooling. The strategy comprises various initiatives,
including an apprenticeship entitlement for suitably qualified
16-19-year olds wanting to engage in work-based learning and the
introduction of 17 new Diplomas – composite qualifications combining
theoretical and practical learning and designed to bridge the gap between
academic and vocational programmes of learning.
In addition to financial support, the September Guarantee and the
provision of more learning options, England is in the process of approving
legislation – the Education and Skills Bill – requiring young people to
participate in education and training until they are 18 or until a qualification
is obtained (A-levels or equivalent), whichever is earlier. The changes will
come into force gradually, requiring youth to participate until they turn 17
from 2013 and until they turn 18 from 2015. Despite its compulsory nature,
the reform is designed to allow more flexible participation than just keeping
young people in full-time education until they are 18: i) available learning
options will be broadened through the 14-19 Strategy; ii) participation will
be either at school, in a college, with a private training provider, in
work-based learning or in accredited training provided by an employer; and
iii) young people working more than 20 hours per week will be allowed to
participate in training on a part-time basis.
In terms of the activation framework, starting in October 2009,
long-term unemployed youth will be referred to a new, more flexible, New
Deal programme. With the new programme, the government hopes to
improve the sustainability of employment outcomes and to increase cost-
effectiveness. Changes will be informed by experience with existing New
Deal programmes and by two pilots launched in the early 2000s –
Employment Zones running since 2000 and the Employment Retention and

JOBS FOR YOUTH – UNITED KINGDOM – ISBN-978-92-64-04646-7 © OECD 2008

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