(Bloomberg) — The number of young British men who are neither in work nor preparing for the world of work is at its highest in over 10 years, posing a major challenge to the economic ambitions of the new Labour government.
For decades, far more women than men were classified as NEET — not in education, employment or training. Thanks to government efforts to get more women into the workforce after the financial crisis, the gap had closed by the time the pandemic struck in 2020. The question now for Prime Minister Keir Starmer is how to tackle rising worklessness in the male population.
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Inactivity not only blights life chances, it represents a cost to the economy in lost potential output and tax revenue. At stake is Starmer’s ambitious target to deliver the fastest sustained growth among advanced industrial economies.
Meanwhile, a fresh light has been shone on the particular problem of male inactivity in the wake of anti-immigration riots that engulfed the UK just weeks after the July 4 general election.
The challenge facing the new government was laid bare in official figures last month. They showed almost 460,000 18 to 24-year-old men were NEET on average in the first half of the year, a rate of more than 16%. The rate for women was 13%.
Worryingly, almost 60% of male NEETs were inactive, meaning they were not looking for work. That number has risen around 45% since 2019. By contrast, the figure for women has barely changed. Campaigners say the health crisis that has hampered the labor market as a whole in recent years is having a big impact.
“We see the rise in mental health issues being felt quite a lot by young men,” said Laura-Jane Rawlings, founder and chief executive officer of Youth Employment UK, which provides career support to young people. “During education, young men tend to be more confident about their next steps and their skills, but with the reality of trying to find a job, that confidence seems to fall away from young boys quite quickly.”
“Young women tend to feel the burden of the financial responsibility a little bit more maybe, so they’ll take that job, they’ll take that low pay, and they’re likely stick it out a little bit more.”
While women have made progress in the workplace thanks to corporate gender-balance targets and flexible working, many young men have been left behind by globalization uprooting jobs and values in male-dominated industrial hubs. The rise of far-right parties in the developed world has been attributed to economic grievances, with men twice as likely as their female peers to support the anti-immigration Reform UK party, according to a YouGov analysis of election results.
Overall unemployment in Britain is low at just over 4%. Yet the jobless rate for 16 to 24-year-olds increased to 14.2% in the three months through July, the most since 2015 outside the pandemic, with one in six out of work for longer than 12 months. Youth unemployment in Britain is higher than the OECD average of around 11% and economists expect it to tick up even further.
“Young people are finding themselves out of work and then remain out of work for longer,” said Barry Fletcher, chief executive officer at the Youth Futures Foundation. “It is a massive policy issue when that starts to go beyond six months or 12 months because that has a long-term detriment to their economic output and obviously has a wider GDP impact.”
With boys performing worse than girls at school, many are finding their options are limited by poor qualifications, which effectively rule them out of some alternative routes into employment like apprenticeships. The ending of a government-backed trainee program in the summer of 2023 has made matters worse.
“We end up with a squeeze in the labor market, where your graduates take the lowest skilled roles because there’s no graduate roles, and they’re squeezing the market for young people who have less qualifications,” Rawlings said. “You get a graduate who is working in a coffee shop, when actually for low-skilled young people, that would be their natural job.”
The onus is now on Starmer and his government to find a solution, and there are good economic reasons for making it a priority. By lowering the NEET rate in each UK region to match the South West — the best-performing region — the UK could gain £23 billion ($30.2 billion), or about 1% of GDP, according to PwC.
Work and Pensions Secretary Liz Kendall has guaranteed training, an apprenticeship or support to find work for all 18 to 21-year-olds. The government also wants to create a national careers service that would help connect people with jobs at a local level.
Out of school and squeezed out of employment, young men are more likely to wait around for the perfect job opportunity to arise, even if that means they become economically inactive, while “girls might just take anything,” according to Rawlings.
Part of the reason is that men can afford to — because many still live at home. A third of men age 20 to 34 were living with their parents, compared to just one in five women in that age bracket in 2023, official data show.
Inactivity has hit the UK harder than other Group of Seven countries, where participation rates are back above pre-pandemic levels. The main culprit is long-term sickness, which now accounts for almost a third of Britain’s 9.3 million inactive people of working age. Young women have seen a slight decline in long-term sickness in recent months, yet male rates have kept shooting up.
Young people are more likely to suffer from mental-health conditions like anxiety and depression, according to a PwC survey conducted earlier this year. And 44% of young people who are NEET said poor mental health is preventing them from finding a job, a separate report by Youth Futures Foundation found.
“We can’t just treat this as a labor market issue, but also we need to tackle that underlying health problem as well,” said Louise Murphy, senior economist at the Resolution Foundation.
“There does seem to be this group of young people who are just very far from the labor market. They’ve never worked, they don’t feel able to work, they don’t feel confident to work.”
–With assistance from Tom Rees.
©2024 Bloomberg L.P.
