Can Labour Fix Youth Unemployment?

Added: 2026-06-02

[00:00:00]Hi, my name's Phil. I like talking about politics. So, youth unemployment is back on the agenda. Was always a focus of the Labor government since winning power, but beyond working on a job guarantee scheme, the details of which are only just emerging really this weekend. We don't yet have sight of the overall plan, but after Alan Milbour was commissioned to report on the problems, what are some of the ways Labor, whether under Starmer or Burnham or indeed anyone else, might employ to real effects? What are the benefits to all of us, including some of which may not be that obvious? I mean, so first of all, what are the macro problems? The micro problems are clear. If you're young and you can't get a job, that is incredibly bad news for you personally. It doesn't just mean you struggle with your standard of living, but you're making zero progress, literally zero progress, getting the sort of experience and skills needed to get decent employment in the future. As Melbourne warns, and he's not exactly the first, there's a risk of losing an entire generation. And as Milbourne has already made clear, this is not the fault of this generation of young people struggling for work.

[00:01:11]It's a systemic crisis inflicted upon them, not caused by them. But as with anything in politics, fixing the problem for young people makes things better for everyone else as well. So what are some of those non-obvious benefits before we look at the solutions? Well, the first is that the younger generation now are the people who are going to fund our pensions. There is literally no way for over 99% of the population to sustain themselves in retirement that doesn't take the form of workers of the time paying for it. You have the state pension, it's workers paying the taxes for it. You have a private pension or private investments. Cool. The returns are powered by workers at the time.

[00:01:56]Unless you have a lottery win sitting in the bank to nibble at through retirement. Your old age is being paid for by the workers of the day, just as the now retired pay for older generations of retirement with their own labors. So if you want a decent retirement, you need these young people working ASAP.

[00:02:18]The second benefit is that when you have a significant proportion of the population unhappy with the social contract presented to them and that social contract as Alan Milbour described it was every generation will do better, have a better standard of living than the one before. And the young generation today are the first generation certainly for a very long time where that is not the case.

[00:02:43]So when you break that social contract, you get the conditions for voting in spite frankly. In politics, there's no shortage and never have been of snake oil merchants or potions claiming to solve all ills quickly and easily. Of course, putting these people in power, funnily enough, produces the beneficial results promised exactly 0% of the time.

[00:03:08]Checking through examples in history and across the world, it sometimes results in genuine catastrophe for their society, never improvements. Best avoided by making sure the social contract works for as many people as possible. Desperate people do desperate things. We know from Brexit, for example, a lot of people that voted to leave the EU did not do it because they were convinced it would work, but because, as far as they were concerned, the social contract was so broken, it couldn't make life any worse for them.

[00:03:43]Desperate people do desperate things.

[00:03:45]Desperate things are often mad things.

[00:03:47]So making sure every generation feels that society is working for them makes sure every other generation has a more pleasant time of it. A third benefit is that the more people in work regardless of demographic. The more pay packets get spent in your economy, both local and national, more business creates more jobs, meaning less effort is needed by the government to help people into work.

[00:04:12]The knock-on effect of this is more tax revenues, meaning more investment in national local infrastructure, assuming you voted for a government who thinks investment is a good thing. Actually, not a given these days, not for the tries. The so-called party business these days doesn't seem to understand what investment even is. But with that investment, you then make productivity even more efficient. Make more money, higher standard of living. Everyone's a winner. But how to achieve it? There are actually fairly easy ways to do it, but no cheap ways to do it. And as demand for government funding is far outstripping government funding resources, that is what makes it difficult. Being honest, I've been getting the strong impression that Labor have very much been trying to solve this problem on a shoestring. Now, sometimes you can deal with a problem with changes to systems don't necessarily cost much if any more money. But two years down the line, if we still don't have sight of this cheap but effective change of system, then it suggests one of two things is likely to be true. One, Labour didn't actually have a plan worked out for doing it at the 2024 election and it's taken this long to work it out. Or two, the attempt at cheap ways to solve the problem aren't working. I suppose a third could actually be that they forgot about the plan. Now, that sounds like I'm being facicious. I'm not. In all seriousness, governments forget about plans all the time. Li literally, that's because there are usually way more policies than ministers, and ministers can only really do so much at once. And then when you consider unexpected emergencies popping up, and there have been loads of them since Trump was reelected, especially and good intentions often do fall down the inbox pile. It's in there somewhere, not being actively worked on. There's also been a change of leadership at the Department for Work and Pensions and changing ministers always stops plans dead in their tracks, but I am kind of getting the impression that probably cheap options are not going to fix it. So, what might fix it? Well, we're going to have to wait for the full recommendations to be published. So far, what's been published are the problems Milburn identified, which the government says tally with their own perceptions.

[00:06:21]And I don't see anyone out there really disagreeing. But one thing I've talked about and at least one Labor minister has discussed is literally just making jobs. If we work on the basis of just creating full-time minimum wage jobs targeted at young people identified as high risk of struggling to find work and in areas where investment is not looking great, you could literally just create about 300,000 jobs for a bit over 7 billion pounds a year. Even if they don't provide any economic returns, it wouldn't actually even cost7 billion pounds a year. Uh a chunk of that money goes immediately back to the treasury in the form of income tax and national insurance. So the actual cost works out about6.3 billion pounds. Then even more tax comebacks after they spent it. Plus actually it's quite newsworthy at the moment. Um Labour promised to get rid of the age bands in minimum wage because younger people get a lower rate of minimum wage. Now, at the moment, they're a bit iffy about implementing that because as soon as you implement it, you make the problem even worse for youth unemployment. So, they're a bit wary and they're now trying to say, "Oh, we didn't necessarily promise it before the next election." It's like, "Yeah, if it's in the manifesto, yeah, you did."

[00:07:36]Um, but it is tricky. So, then if you think so, if we're not even considering the the top rate of minimum wage, it's it' be even less than 6.3 billion pounds a year. I mean, you know, it could just literally be a few billion.

[00:07:50]I'd be very surprised if the Treasury really can't find a few billion a year that this would cost to literally wipe out three quarters of all the young people who are unemployed and not in education or training. Like I know that the the figure the number of needs is is being reported as a million but in terms of the ones unemployed and actively seeking work it's 400,000. So creating 300,000 jobs for young people literally wipes out three quarters of it. When I say wipe out, I mean to take them off unemployment. I'm not advocating a Donald Trump style solution here. And it's such an obvious solution that I really would like to know why it's not being done. Like why wasn't it done immediately on taking office? After all, it's not something you can do overnight anyway. You couldn't just decide we're going to do it and then it happens three months later. Probably take at least a year. there'll be some logistics to it in terms of what clues there are in the report published so far because like what are the recommendations going to be the likely options look to me to be work experience for people unemployed on benefits. We know that Labour have been announcing that yesterday. Um that was always part of the plan. My worry here is avoiding the David Cameron big society trap. Getting employers to offer work experience just ends up with those same employers, not hiring, because why would you pay workers when the job centers sending you slaves for free?

[00:09:15]They may even give them a training grant. I'm not saying there isn't a solution here, but it is fraught. You've got to be careful. You don't solve unemployment by shifting the burden of jobs from the private sector to the state. It's bad enough we have to subsidize wages with universal credit instead of just managing a nice balance of wages and cost of living.

[00:09:36]Another idea could well be devolving power to local leaders to coordinate the education and training needs in that particular region. Now my concern here is that local government is not always run by serious people. Sometimes it is, sometimes it's not. I mean to be fair, national government isn't either.

[00:09:53]The the thing about local government, it's increasingly being run by Reform UK in exactly the areas most in need of urgent help for young unemployed people.

[00:10:01]I just think in theory it makes sense to let local leaders identify prioritize in their own priorities in their own regions, right? But some politicians don't even like the idea of state support for getting people into work. So it's a recipe for disaster. It was it's an idea that would instantly fail in any region that is run by Reform UK or the Conservatives.

[00:10:24]There's no reason why you can't have a centrally managed regional force sorting this out. So centrally directed but operating regionally with that local knowledge addressing mental health was a massive red flag in the report so far.

[00:10:39]This will surely be a big part of the recommendations. It was also a big part of Labour's manifesto. They have been developing plans to focus. We don't really have mental health provision in this country. It's really very poor. And Labour have said we need to build this up. They're going to focus on young people first. So that was always part of the plan. It's not solved overnight.

[00:10:59]It's definitely not solved without lorry loads of cash. We But we basically do have no mental health provision for our society right now. And the youngest generation absolutely need it. We literally had better mental health care in the dark ages. And that's not hyperbole. They did. What I'm not seeing is a hint of something big that will move against the problem before the next election. When Labour thought they were going to get a 10 years when they thought, "Yeah, we'll win the next election as well. Decade of renewal, all the rest of it." Okay, long-term approaches. Great. I wish governments would take long-term approaches. but they now face an uphill battle and they need to focus on prioritizing whatever they can get fixed by 2029.

[00:11:44]What do you think? Let me know your thoughts in the comments below. Please subscribe to the channel for more content. Click the bell notification icon so you know when new videos are out. Thanks for watching and until next time, I'll see you later.