If UK reduces unemployment rate for those aged 20-24 to German levels it could boost GDP by 3%

Germany came second in PwC’s new “Young Workers Index”, which is a weighted average of indicators including employment, education and training that reflects the labour market impact of workers aged 20 to 24. While Switzerland came out on top, Germany was second and Austria third. The UK sits in 21st place

The report noted that one of the biggest differentiators between the UK and Germany is the number of NEETs, with the UK’s NEET rate being at 19 per cent and Germany’s at ten per cent. As such, PwC made recommendations based on the German model, including improved social inclusion for young people and more resources for those at risk of not completing school. It also suggested that such a model could boost the UK economy by three per cent.

Based on results from a previous study by academics at York University for the UK National Audit Office, PwC estimated that the present value of lifetime economic gains from a person being moved out of the NEET category might be around £140,000 at 2015 earnings levels.

If the UK NEET rate for 20-24 year olds could be reduced to German levels, it could boost UK GDP by £55bn. This would take time to build up so it should be interpreted as a long term potential boost to GDP, the report noted.

John Hawksworth, PwC’s chief UK economist, said the index highlighted both opportunities and challenges for business and government. “The UK government has announced plans to create millions of new apprenticeships, and is encouraging businesses to work more closely with schools and colleges to ensure that young people have the skills they need to be employable,” he said. 

“These measures are important because research shows that failing to invest in young people’s skills has long-term economic costs in terms of lower lifetime employment and productivity levels.”

Chris Jones, CEO of the City & Guilds Group, said the way to reduce the number of NEETs is by committing to provide better careers advice in schools. Unless young people receive high-quality advice they won’t know what jobs or training opportunities are available to them, or even what employers are looking for in candidates, he claimed.

He said: “Labour market information and the latest data on skills gaps should be used to shape the advice on offer. There also needs to be closer links between careers advice services in schools and Local Enterprise Partnerships (LEPs), who can advise on the labour market. This will help young people understand where the jobs are.

“If the UK wants to remain globally competitive we can’t afford to waste a generation of talent.”

Share this story

Close
Menu
Send this to a friend