Support young workers, boost the UK economy: 3 ways businesses can help
26 October 2015
According to the results of PwC’s new Young Workers Index* link, there is potential to boost the UK GDP by 3%, or around £55bn, if steps are taken to decrease the number of 20-24 year olds not in employment, education and training.
The study ranks OECD countries on how they develop the potential of their under-25’s. And, at the moment, it’s not an overly positive story for the UK. While Switzerland, Germany and Austria take the top three places of most successful countries, the UK ranks 21st out of 34 countries, slightly down from its 2006 position as 20th.
This reflects the extent of the impact of the 2008-9 recession and subsequent recovery but experience varies widely by countries. In Germany, youth unemployment rates have actually fallen since 2006 and now stand at below 8% for 15-24 year olds, suffering smaller rises in youth unemployment after the global recession. According to the report, their systems of education, vocational training and apprenticeships helped minimise the number of young people falling through the labour market net.
The proportion of 20-24 year olds not in employment, education and training stood in 2014 at around 10% in Germany, Switzerland and Austria compared to 19% in the UK. So the challenge, or opportunity, for the UK is to match the performance levels seen in countries like Germany. But what does that look like?
An important role for UK business
We know from our CEO survey that skills shortages are still a key concern for CEOs globally. Businesses struggle to find people with the skills they need to grow and youth unemployment only adds to this by having a long-term impact on skills. Where will future leaders and innovation come from if young people have a lack of skills and work experience?
The UK Government has already introduced policies and initiatives, like the target to create 3 million new apprenticeships by 2030 and its Employer Ownership of Skills programme. But businesses also have an important role to play, as we’ve seen from the practices in some of the leading countries.
We’ve outlined 3 ways that businesses can support young people in work and, by investing in them, help boost the UK economy:
- Work more closely with schools and colleges: This could help businesses to address skills gaps and raise awareness of employment opportunities. Developing initiatives such as mentoring or work experience, using the passions and skills of the existing workforce and combining recruitment with corporate social responsibility objectives can help students to build up the skills they need for future employment before they reach the job market. It also helps employers to develop a diverse talent pipeline of younger, skilled workers.
- Adapting organisations to attract and retain new young talent will also have an impact. Our previous research on Millennials’ shows that career aspirations of younger workers is different to previous generations. The younger generation has more focus on career progression, flexibility and international mobility and incorporating these into employment policies will make the workplace more attractive to the talent of the future.
- Use the skills that young workers bring. Businesses can make the most of the wider benefits that working with younger generations can bring. If managed in the right way, there is the potential to capture and maximise creativity, innovation, flexibility, high energy and an understanding of new and emerging technologies. Encouraging knowledge sharing and reverse mentoring can help support business strategies for the digital age, as well as present short-term benefits of lower recruitment and wage costs.
Although it might take decades to see the true benefits, fundamental changes by both government and businesses are needed now to realise the gains of this dynamic, important workforce.
What steps has your business taken to support the younger generation of workers? We’d love to hear from you.
*PwC’s new Young Workers Index is a weighted average of eight indicators – including employment, education and training - that reflect the labour market impact of workers aged 20-24 across 34 OECD countries.
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