Britain’s New Record: Most Young People Out of Work in Europe

Britain has just set a new world record. It has the highest level of unemployment of its young citizens of any nation in the developed world. 

The new buzz word on the BBC and in all newspapers is “The Lost Generation.”  Though this development is hardly mostly of its own making, it is particularly embarrassing for the current Labour government that has been in office for two years now and is equipped with a giant majority to enact legislation in the House of Commons. 

A national disgrace

In a major new report commissioned by the government that has dominated public discussion in the UK, a shock report reveals one million 16-24-year-olds called NEETs (Not in Education, Employment or Training), with this number rising.

Young people’s stories of sending scores of job applications without even a response. So they keep just living at home without hope, a job, income or a purpose. They are young men and women, black and white, Muslim or Catholic.

Predictable blame games vs. the reality

Employers interviewed conveniently claim it is all the fault of the current Labour government. The far-right Reform party, headed by Nigel Farage, predictably blames the 13 per cent of the UK population not born in Britain.

Far more relevant than these predictable assignments of blame is the fundamental fact: The analysis of labour market policies and politics has become unfashionable as topics of economic and sociology academic work or media investigation.

In the last century, every newspaper and the BBC in Britain had a Labour correspondent covering the world of work. They have basically all disappeared, save for a lonely woman who is the Labour correspondent at the Financial Times.  She surfaces from time to time with a well-informed but infrequent column.

Wrong turns galore

There is no simple single explanation, but in recent decades Britain has taken important wrong turns in ensuring its young citizens cannot easily enter the world of work.

Few people still remember that, up until the 1960s, 35 per cent of boys leaving school aged 15-17 went into employer-funded apprenticeships, just short of a quarter of a million youngsters in total. By 2023/24 academic year, that figure which now included girls was down to 77,720 apprenticeships.  

From Thatcher to Blair

The key political figure in reducing apprenticeships for young workers was Margaret Thatcher. For her, bosses being obliged to train young workers represented old-fashioned social partnership labour market thinking. Her preference was on freeing companies of the obligation to train workers, so that employers could boost shareholder dividends and executive bonuses.

Tony Blair, after Margaret Thatcher the UK’s second most consequential Prime Minister in the last 50 years, was indifferent as well.  All he saw as old-fashioned industries, which led him to have no interest in craft apprenticeships. Instead, he wanted half of all school leavers to go to university, even though he ended free university tuition in Britain in 1998. 

Eastern Europe comes to the rescue

Pro-Blair think tanks argued that making university degrees the way forward would end people only receiving what is often labelled as poverty pay. But these social policy planners had no idea of how labour markets actually worked. 
British employers certainly needed non-university graduates to do more low pay jobs. But the skills gap that had developed was closed by the epochal event of the end of communism.

The opening up of Eastern Europe meant UK employers could import skilled craft workers from Poland and other ex-communist nations.  These countries had maintained working-class crafts training, notably as a deliberate part of the Communist idealization of the skilled manual worker.

In that process, 2.2 million East Europeans, many graduates of Communist-era apprenticeship systems, came to Britain after 1990s to do the jobs that Britain had earlier stopped training its youngsters to do.

Following Brexit in 2020, Boris Johnson as prime minister issued 1.1 million visas for workers often accompanied by dependents from Asia and Africa to do the jobs that previously had been done by trained as well as unskilled European workers in Britain. 

The disastrous results of Britain’s ideological labour market experimentation

Today, the disastrous results of Britain’s ideological experimentation with labour market policies are in.  Altogether, 700,000 graduates have left university and are now jobless.  They exist on meager welfare benefits that are completely insufficient to start a family or buy a home. 

According to the OECD, the UK’s youth unemployment rate now stands at 15.3% – more than twice that of Germany where apprenticeships and technical training are still the norm for school-leaver not destined for higher education.

Other EU states mainly in Northern and Central Europe have maintained apprenticeship schemes with 20-30 per cent of youngsters not destined for a university education enrolled as in firm-based apprenticeships. 

Starmer made things worse

This already painful record of disastrous labour market errors has not been helped by the unforced errors in fiscal policy by the inexperienced Labour government since 2024. 

Hoping to win support among young people, Keir Starmer, a lawyer with little political experience, has significantly raised the legal minimum wage for young workers to nearly the same level for older workers. 

As a (predictable) consequence, employers have stopped hiring school-leavers who previously would work their first years at lower wage rates than older, more experienced workers. 

Labour has also increased the social security tax paid by low-pay employees rather than make better paid employees pay the higher National Insurance contributions. 

Labour also rolled over to the City of London

As the economics journalist Michael Simmons points out, Labour finance ministers have rolled over to give the City of London and British financial sector firms a free ride by not asking them to make any contribution to restoring economic equilibrium after the unhappy inheritance of the five Conservative Brexit prime ministers 2016-2024.

Labour-friendly think tanks and ministers have called for tax hikes or reduction in social support for poorer families.  Currently, low-paid workers pay a higher share of their income in tax compared to better-off or indeed quite wealthy Britain. Taxes on firms in the tourist and catering trade have gone up as well, so they are no longer able to offer starter jobs to teenage school-leavers.

An explosive mix

Meanwhile, the continuing arrival of immigrants from overseas willing to work for low pay on a 24/7 basis means many starter-salary jobs are no longer available to young workers.

This, in turn, fuels voter support for extremist parties of the far-right and far-left who are winning support in local, regional and national elections with promises of instant job creation if their ethno-nationalist or anti-market candidates are elected.

Learning from Europe

Jeremy Hunt, the former Conservative Chancellor in charge of national economics and finance in the Tories’ Brexit governments, has just published a book “Can Britain Get Rich Again?” 

Each chapter makes policy recommendations that are, remarkably, based on copying better practice in Europe!  
In contrast, Prime Minister Starmer still clings to his mantra of not challenging Brexit (read: the UK exit from the European policy cloud), even as every opinion poll shows majorities of 60 per cent or more agreeing Brexit was a grievous policy error.

When at last will the UK learn?

Despite this remarkable shift in the public’s mindset, there is still an incredible, deafening silence in the UK’s political, media and business class regarding the lost decade of Brexit, which has seen Britain’s GDP down by 6-8 per cent.

In the meantime, in a shrinking economy, the school leavers of Britain can no longer obtain the jobs that firms having the cashflow to employ youngsters once offered after they had completed their apprenticeships, leading them to a viable skill.

A misdiagnosis by Europe’s left-of-center parties

In the end, though, it is not just the Labour Party in Britain that must realize that its policy to shift educational preferences strongly toward university degrees is backfiring rather badly.   

Not the least relevant consideration in this context is that, in the Age of AI, shallow university degrees – of which there are many – can be easily replaced by AI programs, while skilled manual workers are not.

As to wages, just ask the Swiss. There, skilled manual workers with a series of further career qualifications in their trade easily earn more money than many university graduates.