The CBI has called on the Government to introduce a new tax incentive to encourage companies to take on young unemployed people, as part of a package of measures aimed at boosting employment across the UK.
Against a backdrop of rising unemployment and with one in five young people currently out of work, the CBI is launching a new report Action for jobs: how to get the UK working. Among the measures it calls for is a new Young Britain Credit worth £1500 for firms taking on an unemployed person aged between 16 and 24 years. This would cover the first year’s National Insurance for employers, cost £150 million a year, and is affordable within the context of the Government’s deficit reduction plans.
Other proposals include: creating around 450 business ambassadors, one for each local area, to strengthen links between schools and businesses using successful schemes that build long-term partnerships; introducing a comprehensive “readiness for work” assessment for every unemployed person; and suspending, rather than completely cancelling benefits when someone initially takes a job to reduce the perceived risk of taking a short-term post.
John Cridland, CBI Director-General, said:
“With unemployment rising, particularly among young people, now is the time for action for jobs.
“The best way of getting the UK working is to get the private sector motoring, but the labour market has been wracked by structural problems long before the recession struck that won’t be swept away by a return to growth.
“The good news is that even in these challenging times businesses are creating jobs, but all too often the unemployed, particularly our young people, are not best placed to get them. We need businesses, schools and the Government working together to make sure young people are able to shine in the jobs market.
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“Our proposals are not exhaustive, but taken together would herald a major shift in the way we prepare youngsters for the world of work, provide support for companies to create and retain jobs, and ensure the benefits system makes work pay.”
The CBI’s recommendations are based on extensive research with businesses, academics, charities, unions and unemployed people across the UK. They follow the publication earlier this year of in-depth CBI analysis on the state of the labour market. This revealed deep-seated structural problems, including long-term unemployment and skills shortages that predate the recession.
Given the scale of youth unemployment, with one million youngsters not in work, and many not in training or education, the proposals focus mainly on this vulnerable group. However, many of the recommendations support employability across the economy. The proposals fall into three broad areas for action: getting young people ready for work; making the first year count by improving their position in the jobs market; and ensuring that it pays to work by reforming the benefits system.
Making young people job-ready:
Looking at ways of getting young people ready for the world of work, the CBI is calling for action to smooth the chaotic transition from school to work by strengthening links between businesses and schools and building on schemes that are proven to work. Proposals include:
• Supporting a national roll-out of successful existing school-business engagement initiatives with a new ‘Employability School’ standard
• Putting in place a network of local business people to act as champions, developing school-business links in each local area
• Stepping up businesses’ commitment to providing high-quality meaningful work experience.
Commenting on these proposals, Mr Cridland said:
“Businesses and the Government need to put their shoulders to the wheel and get our young people job-ready.
“We are calling on business leaders to become local champions in schools and colleges across the UK to enthuse young people about the world of work from an early age.
“Businesses need to ensure that work experience is more than just photocopying or making cups of tea, but a meaningful insight into working life.”
Making the first year count: improving the position of young peoplein the jobs market:
To help incentivise employers to take a gamble on a young and less-experienced person, the CBI is calling for:
• The introduction of a Young Britain Credit, which will reduce the cost of taking on a young person by offsetting employers’ National Insurance for the first year, as well as freezing youth National Minimum Wage rates, which as a percentage of median wages for the age group are higher than the equivalent level for adults
• Investing in courses that help bridge the gap between school and apprenticeships to allow 16-18 year-old school leavers that lack the appropriate skills to take up training opportunities.
Mr Cridland added:
“A young person’s first job is a crucial step on the road to building a career, but employers are often reluctant to take on someone without any experience.
“The Government needs to make it as attractive as possible for firms to take a gamble on a young less experienced candidate.
“Our proposal for a Young Britain Credit is a cost-effective way of incentivising companies to recruit jobless young people, and would give them that all-important foothold on the jobs ladder.”
From welfare to employment: ensuring it pays to find a job:
With more than five million working age people claiming an out of work benefit, welfare dependency is a pressing challenge. The benefits system currently acts as a deterrent for many people seeking employment. Although the Government is already taking steps to deal with welfare dependency through the Work Programme and Universal Credit, there is much more that could be done. To ensure the welfare system always makes work pay, the CBI is calling for:
• Jobcentre Plus to be refocused on job search through a new readiness for work assessment and earlier Work Programme support where necessary
• Reform of benefit rules that act as a disincentive to taking a job. For example, by suspending rather than cancelling benefits when someone takes a job.
Katja Hall, CBI Chief Policy Director, added:
“We need to make being in work more attractive than being on benefits and make it clear that welfare is not a career path.
“Understandably many people worry that if they take a low-paid job that doesn’t work out they could lose their benefits for weeks while they try to get back into the system. “Suspending benefits payments rather than stopping them completely would help overcome this fear factor in taking a job.
“Job centres should focus more on assessing skills and finding suitable opportunities, rather than just doling out benefits.”
