New Data from the Office for National Statistics shows that the UK unemployment rate is predicted to be at 5.0%. Previous data show that the UK unemployment rate was at 5.1%, illustrating that unemployment may be on a downwards trend.
This decrease in unemployment is likely attributed to increased economic activity. Especially from businesses as evidenced by the increase in the number of online-vacancies as well as a decrease in the redundancy rate to 11.0 per thousand, a decrease from the record high.
This confidence is likely a direct result of vaccine rollouts as well as the announcement of the government budget and roadmap which have provided forward guidance for economic agents.
Despite this increase in business confidence, economic inactivity was estimated at 21.0%. This is 0.6 percentage points higher than last year and 0.3 percentage points higher than the previous quarter.
Additionally, the total number of weekly hours worked was 968.0 million, a decrease of 83.1 million hours since last year. Nevertheless, it is an increase of 8.0 million hours compared with the previous quarter.
However, although the entire economy is showing signs of recovery, some specific sectors have been suffering compared to other areas. For example, accommodation and food services have suffered an earnings median growth of -8 compared to the UK median of 4.
Hence, it is no surprise that the largest decrease in the number of payrolled employees is within younger age groups.
The accommodation and food service sectors typically have younger employees. This is because the barriers for entry to become a worker in these fields are not high compared to industries with more restricted labour supplies.
Therefore, young people typically find themselves doing jobs in foodservice and accommodation during summer breaks or during the school term to relieve the financial pressure associated with University life.
Consequently, the decrease in payrolled employees between ages 0-17 of 147,387, is likely correlated to the decrease in the earnings median growth.
Additionally, there has been a decrease of 289,422 in the 18-24-year-old group, which also encapsulates young people and university students. Overall of the 693,000 fall in UK employees, 63.1% (437,000) were in the under 25 groups.
As of writing the article, the current UK youth unemployment rate is at 14.5% compared to the 5.0% unemployment figure which includes 16-65-year-olds.
This makes youth unemployment a particularly pressing matter for the UK economy. An unemployed young person is essentially made more and more redundant each year, this is because each year fresh new, highly skilled candidates from University and College flood the labour market.
Hence, unemployed young people are a problem for the economy, not only are they not developing skills, but it is also harder for them to become employed as the pool of more favourable candidates expands year on year.
This makes it a more permanent problem as, unlike the unemployment in the tourist industry due to coronavirus, young people who have been unemployed for long periods find it difficult to find work compared to more experienced candidates.
Therefore, youth unemployment hinders the productive capacity of the economy. This is because resources are being wasted as certain individuals do not have jobs and are not producing anything for the economy.
Nevertheless, the introduction of apprenticeships by the government is one scheme that has been implemented to help better the youth unemployment rate. Apprenticeships guarantee a stable career for any young person who manages to pursue one, and, it has much less risk associated with it compared to a University that requires the paying of student loans.
Because of this, the introduction of apprenticeships also increases social mobility. Due to the debt associated with University, lower-income families are likely unable to take the risk of sending their child to upskill.
Hence, due to the lower barrier for entry that apprenticeships offer, they allow for better social mobility as they also provide similar qualifications. This improves the opportunities which individuals have within the economy, bettering living standards and reducing youth unemployment.
Overall, the decrease in the number of payrolled employees in younger groups is somewhat temporary as it is attributed to the decreased demand for those industries as a result of the lockdown. However, once the lockdown ends, youth unemployment may spike as the individuals who worked in those industries have now been made redundant with newer, perhaps more educated candidates coming into the labour market.
But, with the introduction of apprenticeships, which usually have lower entry requirements compared to university, these unemployed young individuals still have a chance to improve their skillsets enabling them to pursue better paying, more fulfilling careers.
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