Getting NEETs into work could boost GDP by 3%

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By matching Germany’s approach to unemployed people the UK could see a £55 billion increase in GDP

UK GDP could be boosted by 3% – around £55 billion – if we reduced the number of UK people aged 20 to 24 not in employment, education or training (NEET) in line with Germany, according to analysis from PricewaterhouseCoopers (PwC).

Germany came second in PwC’s new Young Workers Index, which is a weighted average of eight indicators including employment, education and training that reflects the labour market impact of workers aged 20 to 24. Switzerland was rated top and Austria came third, while the UK sits in twenty-first place. Italy, Spain and Greece ranked the lowest.

The report notes that one of the biggest differentiators between the UK and Germany is the number of NEETs, with the UK’s NEET rate at around 19% and Germany’s almost half that (10%). As such PwC has made recommendations based on the German model, including improved social inclusion for young people and more resources for those at risk of not completing school.

The UK’s performance in the index has improved from previous years but still remains below average. This improvement reflects the relatively strong growth in employment since 2011 as the economy recovered from recession, but the UK still lags behind in areas such as employment levels and combatting long-term unemployment.

John Hawksworth, PwC’s chief UK economist and co-author of the report, said that the Index highlights both opportunities and challenges for business and government. “The UK government has announced plans to create millions of new apprenticeships, and is encouraging businesses to work more closely with schools and colleges to ensure that young people have the skills they need to be employable,” he said. “These measures are important because research shows that failing to invest in young people’s skills has long-term economic costs in terms of lower lifetime employment and productivity levels.”

Chris Jones, chief executive of the City & Guilds Group, said that the way to reduce the number of NEETs is committing to providing better careers advice in schools. “Unless young people receive high-quality advice they won’t know what jobs or training opportunities are available to them, or even what employers are looking for in candidates,” he said. “Labour market information and the latest data on skills gaps should be used to shape the advice on offer. There also needs to be closer links between careers advice services in schools and Local Enterprise Partnerships (LEPs), who can advise on the labour market. This will help young people understand where the jobs are.

“If the UK wants to remain globally competitive we can’t afford to waste a generation of talent,” he added.

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