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The labour market state of affairs for younger individuals in London immediately is among the many hardest because the fallout from the 2008 monetary disaster.
There are simply over 900,000 16-24 year-olds in London. Many are in training, some on apprenticeships, some working half or full-time. However growing numbers are struggling to ascertain themselves within the labour market, piling monetary stress on them and their households and undermining their sense of self-worth.
Lengthy-standing difficulties with the Workplace for Nationwide Statistics (ONS) labour drive survey have affected analysts’ makes an attempt to get a transparent image of what’s going on within the labour market. Nevertheless, varied knowledge sources make it obvious that circumstances for younger individuals looking for work have worsened.
Nationally, the unemployment price has risen from 10.7 per cent in 2022 to 14.0 per cent in 2024. There was a slight easing of this previously couple of quarters, however the 2024 annual youth unemployment price was the very best for ten years. And in London it’s considerably greater.
Unhelpfully, there’s a paucity of granular London knowledge. Nevertheless, Belief for London quotes a youth unemployment determine of 14.6 per cent on the finish of 2023 and the NOMIS dataset from the ONS has a determine from pooled date for April 2024-March 2025 of 17 per cent.
These unemployment figures are worrying, and an additional labour market indicator, that of inactivity charges, compounds the priority. ONS knowledge present that, nationally, the financial inactivity price for younger individuals (that’s, these not capable of work or not looking for it ) is operating at over 30 per cent and has been on a rising development for a few years.
Financial inactivity displays sure decisions – for instance, if a youngster chooses to remain in training. However since 2023, this measure has been rising for younger individuals out of full-time training. The present quantity is across the highest stage recored because the present collection started in 1992.
A latest Home of Commons briefing paper on youth unemployment notes how, because the begin of the pandemic, there was a rise within the variety of 16-to-24-year-olds who’re economically inactive as a result of long-term sickness. This has been pushed largely by a rise within the variety of younger individuals with a psychological well being situation.
There’s a well-worn narrative that seeks to elucidate London’s excessive youth unemployment price: employers are on the lookout for ever greater talent ranges; there’s a misalignment between the varsity curriculum and labour market wants; there’s inadequate funding in additional training and a paucity of apprenticeship schemes.
A post-2022 twist comes from the speedy and speculative adoption of AI instruments by many companies. That is slicing entry-level jobs in administration, buyer companies and even software program growth, and wiping out swathes of graduate entry jobs.
The recruitment web site Adzuna reviews that entry-level jobs now solely account for 25 per cent of the market within the UK — down from 28.9 per cent three years in the past – and that the variety of job vacancies has declined by 32 per cent since 2022. It additionally reported Dario Amodei, chief government of AI firm Anthropic, warning that the expertise may wipe out half of entry-level jobs within the subsequent 5 years.
That is according to analysis concerning the US. A latest paper from Stanford College reveals how employment has declined for younger staff in AI-exposed occupations (they spotlight software program engineers and customer support brokers). Development in employment as an entire continues, however for younger individuals it has stagnated.
These with no toehold within the labour market of any form are caught in a horrible bind, as entry-level jobs each for these with GCSEs and people with A ranges and levels vanish. These qualification pathways have been conventional routes into well-paid and secure careers. However it’s not like that anymore.
Chatting to a Sainsbury supply driver, who’s self-funding a coding diploma as a result of everybody assured him coding was a gateway talent to a well-paid software program developer job, I questioned what he ought to do. Crack on, double-down and check out for a Masters? Tackle extra debt within the imprecise hope of touchdown, finally, a excessive paid function or grind out the hours in his present function on a simply above minimal wage?
The speedy adoption of AI is altering our labour market in methods we nonetheless don’t actually perceive – and much more rapidly than coverage can reply. There will likely be winners in addition to losers, but when we don’t wish to additional entrench employment inequalities we have to be braver about discovering a strategy to recycle a few of the staggering income the tech companies are making into particular assist for these whose labours they’re making redundant.
The latest UK-US tech settlement goes massive on new knowledge centres, however these don’t, of themselves, generate many roles past the development part. They’re capital-intensive, not labour-intensive. A brief one-percent windfall tax on AI-excess income earned within the UK may present a ring-fenced fund to assist 1000’s of paid apprenticeships in not simply AI and digital sectors, but additionally these the place there are lengthy standing shortages, similar to nursing or childcare. On this method, the AI transition may be made extra inclusive.
In the meantime, in the actual world, the federal government’s coverage response is to ascertain a Youth Assure so that each younger individual aged 18 to 21 has entry to additional studying and assist with getting a job or an apprenticeship. Youth assure trailblazers have been launched in eight mayoral authorities in England, and London has been awarded £30 million for 2025-26 to spend money on locally-led employment assist programmes.
London authorities – the Mayor and London Councils – has lengthy highlighted how youth unemployment disproportionately impacts black Londoners, disabled youth, and people with psychological well being challenges. Its response has tended to give attention to tackling the fragmented nature of employment companies provision.
As the latest London Councils report, Breaking Boundaries, argued, “there are lots of our bodies working on the nationwide, London, sub-regional, and borough ranges which supply employment and expertise companies to younger Londoners, however the lack of integration and collaboration amongst them hinders efficient assist.”
As a part of the London response, the Mayor set-up the No Fallacious Door programme, which seeks to make sure that whichever route a Londoner chooses, they get directed to the suitable steerage or coaching to assist them achieve employment and increase their expertise. This goal is delivered by 4 sub-regional partnerships, that are the recipients of the trailblazer funding.
A kind of partnerships, the Native London integration hub, focuses particularly on adults (19+) with particular instructional wants or disabilities and on younger individuals with few {qualifications}, particularly these with out Degree 2 English or maths.
Native London covers 9 outer-London boroughs throughout the jap facet of London. It focuses on assist for faculties by their profession hubs, which offer self-development and profession administration expertise for college kids and significant exchanges with employers.
It additionally seems to assist younger individuals by capturing their voices by youth summits, in order that interventions are extra carefully aligned to younger individuals’s considerations. The workforce helps to develop a core supply that each one younger individuals in London ought to have the ability to entry by interactions with their very own devoted youth frontline advisor, although future funding for this resource-heavy initiative is just not but secured.
By way of its engagement with native companies, Native London discovered that many SMEs may be overwhelmed with functions once they promote a vacant function. With out the sources to effectively handle the method, they will come to depend on phrase of mouth and other people they know when selecting who to tackle. This compounds the issues of these with low ranges of social capital.
Caroline Kandaya, who leads on the mixing hub at Native London, want to see extra direct intervention to assist companies with taking preliminary steps to create and recruit younger individuals for brand spanking new roles.
Kickstart, the Covid-era employment assist scheme for younger individuals, was extensively criticised for being overly bureaucratic and rigid, however Caroline argues that the extent of monetary assist – paying 100 per cent of the age-relevant Nationwide Minimal Wage, Nationwide Insurance coverage and pension contributions for a 25-hour week for six months – was essential in mitigating the prices of using somebody in a state of affairs the place margins are tight throughout the agency.
The mixing hubs have the potential to deal with long-standing failings within the functioning of London’s labour market. However they want a lot bolder ranges of funding and fewer prescription. London authorities has lengthy argued for larger flexibility over using the apprenticeship levy and for some management over the underspends, in order that sources may be introduced collectively.
Strikes to offer London with an built-in funding settlement, which is able to embrace grownup expertise and employment assist and be multi-year, must be the catalyst for amplifying the work of the hubs.
There may be momentum behind them. However to essentially push on, they want the funds to develop their tech infrastructure, to make use of well-resourced youth advisors and – wouldn’t this be one thing? – to have the flexibility to pilot a Kickstart-like programme of monetary assist for native small and medium enterprises. to tackle a teenager who wants a serving to hand into the labour market.
All of the components are there to permit the hubs to make decisive interventions. It’s time to deliver all of them collectively.
Observe Richard Derecki on Bluesky. Photograph from Native London.
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