RUTH SUNDERLAND: Labour counting the cost of betraying our youngsters
This Government has performed more embarrassing U-turns than an inept learner driver.Abandoning the manifesto promise to pay young people the same national minimum wage as older employees may well be the next such manoeuvre.In principle, decent employers would like to reward all staff, including young workers, with a nice fat pay packet.In practice, however, with nearly a million youngsters branded as NEET – Not in Education, Employment or Training – large hikes in hiring costs are pricing them out of the labour market before their careers have even begun.A combination of minimum wage rises and National Insurance increases has dramatically pushed up the costs of taking on lower-paid workers of all ages since Labour took office.The cost of a full-time employee on minimum wage has risen by 15 per cent to £25,852, an increase of £3,400. Pointing the finger: The tax rises intended partly to fund services for disadvantaged young people are destroying the entry-level jobs those young people needBut for a young person aged 18 to 20, the cost has risen by a far heftier 26 per cent to £19,747 – more than £4,000. For an apprentice, it has gone up from £11,648 to £14,560, a 25 per cent increase.There is a bitter irony here. The tax rises intended partly to fund services for disadvantaged young people are destroying the entry-level jobs those young people need. It is a self-defeating loop that somehow had eluded the Treasury.Those arguing it is unfair to pay younger staff less ignore inexperience, training costs and the risks of taking on someone with fewer skills.Faced with a growing tax burden and an uncertain economy, firms are reluctant to hire youngsters. Either they seek more seasoned staff or decide not to hire at all. The Government has commissioned former health secretary Alan Milburn to investigate NEETs, but that will be pointless if it persists in making it less attractive for employers to take them on.Rachel Reeves' efforts will not work. Her Youth Guarantee Scheme offers a place in employment or education to 18-to-21 year olds who have been NEET and on benefits for 18 months.But by that time, too much damage has been done.A generation is being betrayed and the only solution is to intervene before young people become NEET. It means action in schools, which should not be exam factories but prepare pupils for the world of work, instilling punctuality, reliability, maturity and a can-do approach: Old-fashioned virtues that have somehow been lost.Youth unemployment is running at more than 16 per cent, above the EU average for the first time since records began over a quarter of a century ago. The NEET crisis overlaps with a wider one of regional inequality. The think-tank Impetus found rates are far higher in deprived areas such as Knowsley on Merseyside and Middlesbrough, my home town.Youngsters there face multiple barriers: Poverty, low qualifications and poor mental health. The North East has the highest overall NEET rate at more than 17 per cent.Multi-generational workless families are a legacy of lost heavy industry compounded by the 2008 financial crisis and the pandemic.The Conservatives rightly point out the problem has worsened since the election, but NEET rates were already too high when they left office.As for the Government, it is failing the communities it was elected to serve – places where working people once voted Labour by reflex.Now, on every visit home, I see more lamp-posts and gardens festooned with Union Jacks and flags of St George.Reform is filling the void and neither main party can say it was not warned.DIY INVESTING PLATFORMSAJ BellAJ BellEasy investing and ready-made portfoliosHargreaves LansdownHargreaves LansdownFree fund dealing and investment ideasinteractive investorinteractive investorFlat-fee investing from £4.99 per monthFreetradeFreetradeInvesting Isa now free on basic planTrading 212Trading 212Free share dealing and no account feeAffiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.Compare the best investing account for you
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RUTH SUNDERLAND: Labour counting the cost of betraying our youngsters
