Getting more young people into work, education or training could add £45 billion to UK GDP

Published at 00:01 AM on 26 October 2016

  • Improving youth employment across OECD countries could boost their total GDP by $1.1 trillion
  • UK ranks 21st out of 35 OECD countries in PwC’s Young Workers Index
  • Improving youth employment rates doesn’t disadvantage older workers

The UK could increase its GDP by around 2.3% or £45 billion by reducing the number of 20-24 year olds not in employment, education or training (NEET) to match Germany, the best performing EU country, new PwC analysis reveals.

Across all 35 OECD countries, the total long-term economic gain could be around $1.1 trillion if countries with higher NEET rates among 20-24 year olds lowered them to match the German level of around 10%. The potential boost to GDP varies significantly across countries, from 0.1% in the Netherlands to 8.9% in Turkey.

PwC’s Young Workers Index is a weighted average of eight indicators – including employment, education and training – that reflect the labour market and educational participation of young workers across 35 OECD countries. The UK’s performance in the index has improved since last year, rising one place from 22nd to 21st, but remains below the OECD average and pre-financial crisis levels.

YWIchart1

John Hawksworth, chief economist at PwC, commented:

“While it’s encouraging that the UK has significantly improved the number of young people in employment, education and training over the past year, we still face challenges around skills mismatches in the labour market.

“We’ve identified three key themes which feature in high performing countries in our Young Workers Index, such as Germany, Austria and Switzerland. Governments in these countries encourage vocational training alongside formal education to bridge the gap between education and employment, they engage employers with youth and schools at an early stage, and they concentrate on social inclusion to combat barriers to employment. By tackling common obstacles, these policies help support young people’s transition to the workplace.”

Businesses are also taking a proactive approach to investing in young workers. Methods to achieve this include developing structured high quality apprenticeship schemes in all sectors of the economy, supporting youth-led social action programmes, and providing information about alternative career options to those still at school.

Laura Hinton, executive board members and head of people at PwC, said:

“In order to get more young people into work, education or training, we need to make sure that students, parents and teachers know about the range of options and routes available. It is only with greater awareness and wider access to opportunities that more young people will be able to reach their full potential.

“Employers, universities and colleges need to work together to ensure that every point on the different paths from school to employment are fair, open to all and free from bias. Businesses should challenge themselves on whether there are any barriers to their profession and, if there are, act to remove them. For example, we removed UCAS scores as an entry criteria for the majority of our graduate roles and as a result saw an increase in the number of applicants from diverse backgrounds.

“Businesses will need diverse talent if they are to succeed in the future. This means hiring people in different ways, from broader backgrounds and with different skill sets than we ever have before.”

Improving youth employment doesn’t disadvantage older workers. By comparing the Young Workers Index to the firm’s Golden Age Index, PwC has found a positive relationship between improving employment rates for young and older workers.

YWIchart2

John Hawksworth concluded:

“The complementary relationship between youth employment rates and those of older workers demonstrates how workforce diversity benefits the economy. Businesses also stand to gain from this, by enabling young and older workers to share knowledge through initiatives like reverse mentoring on digital skills.”

Ends.

Notes for editors.

  1. Methodology: The PwC Young Workers Index is a weighted average of eight indicators, including NEET rates, youth employment and unemployment rates, incidence of long-term unemployment, school drop-out rates and educational participation rates. The age range covered is generally between 15 and 24, but varies as appropriate by indicator.

These indicators are normalised, weighted and aggregated to generate index scores for each country. The index scores are rescaled to values between 0 and 100, with the average value across all 34 OECD countries set, by definition, to 50 in 2006. Index scores were also calculated for 2011, 2014 and 2015 (or the closest years for which internationally comparable data were available).

Further details of the methodology, including the calculation of potential long-term boosts to GDP from lower NEET rates, is contained in the full report.

  1. A copy of the PwC Young Workers Index will be available from 26 October 2016 at pwc.co.uk/youngworkers.
  2. PwC is committed, both through our community affairs and recruitment teams to supporting young people into employment. We offer a variety of programmes and activities using our skills and resources, ranging from mentoring and employability workshops to work experience and our National Schools Employability Challenge to support young people nationwide both in person and online.

For further information please contact Tilly Parke: [email protected] / +44 20 7804 8761


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