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Youth contract fails to hit mark for manufacturers

19 September 2012

A key part of the government’s flagship programme to help get the long term unemployed back to work is seeing virtually no take up from Britain’s manufacturers.

Stephen Radley
Stephen Radley

According to a survey of almost 200 companies released today (September 19) by the Engineering Employers' Federation (EEF), only one company said it was both aware of the scheme and involved. Almost half said they were aware but not involved or considering it, whilst 11 percent said they were not aware and would not get involved.

This contrasts with those accessing an apprenticeship grant* to take on a 16 to 24 year old. The survey shows 16 percent of companies were aware and involved in this scheme, whilst a further 22 percent of companies were aware and considering involvement. Only 6 percent of companies were unaware and would not get involved. The survey coincides with a report by the Work & Pensions Select Committee into the Youth Contract.

Commenting, EEF Director of Policy, Steve Radley (pictured), said: “Addressing the problem of long term youth unemployment is critical for the economy and business has a vital role to play. But, as well as a worrying lack of awareness for such a flagship scheme, taking on someone from the Work Programme is seen as a significant risk for manufacturers at a time of huge economic uncertainty.

“Job Centre Plus must therefore play a key role in preparing young people for placements in the Youth Contract by ensuring that they have the basic employability skills. The government also needs to do more to raise awareness of the programme and the incentives on offer.

“Furthermore, given the responses to the programme so far and employers’ growing need for skilled young people, the Work Programme should put a greater focus on the Apprenticeship Grant and routes into structured training offered by Job Centre Plus’s shorter-term work placements."

As well as a lack of knowledge of the scheme and incentives, employers are nervous about taking on young people who has been out of work for a long period and are concerned that they lack the basic employability skills. To counter this EEF believes that Job Centre plus should be effectively resourced to provide young people with pre-employment training in basic skills which would then make them more attractive to employers.

EEF is also calling for more of the Youth Contract resource, worth £1billion, to be targeted at schemes around apprenticeships and the shorter-term work experience provided by Job Centre Plus. Manufacturers are more likely to offer a young person an apprenticeship and encouragement should be given to those on the Work Programme to go down this route.

Furthermore, EEF believes there is also work to do in raising awareness of other initiatives on offer to businesses. The work experience scheme, where a young person claiming Jobseekers Allowance on day one can take up a placement for up to 8 weeks would be attractive to employers but there is a lack of information about the scheme.

EEF is also recommending the placement period should be extended to 12 weeks so that employers can use this time to train up a young person and use it as ‘probation period’. EEF believes is it highly likely that employers would subsequently offer that young person a job through this route.

Commenting on the Work and Pensions Select Committee’s report on youth unemployment and the Youth Contract, CBI chiel policy director, Katja Hall said: “The Youth Contract, especially the wage subsidy the CBI called for, is crucial to giving young people that extra leg-up in a tough labour market. But on its own, the Youth Contract won’t be enough to solve the unemployment crisis among young people, as this report highlights. To provide jobs for our young people long-term, we need fundamental reforms of the welfare and education systems, alongside economic growth.

“In England alone, there are 47 initiatives aimed at incentivising firms to hire and train young unemployed people, but firms tell us the sheer complexity of the system is off-putting. Rather than more new initiatives, what businesses need is a streamlined system that is easy to access.”

*The Work Programme as part of the Youth contract provides a cash payment to employers of £2275 for taking on a 16-24 year old who is long term unemployed. An Apprenticeship grant to an employer for taking on a 16-24 year old is £1500

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