The kids aren’t alright: a new approach to tackle the challenges faced by young people in the UK labour market

Published on Jobs, Skills and Pay, Intergenerational Commission

The Resolution Foundation’s Intergenerational Commission has analysed the breakdown of generational progress in a number of domains, including housing, the welfare state and the labour market. In terms of the latter we have outlined how the assumption that each generation will earn more than the one before it no longer appears to hold.

This paper moves beyond the diagnosis of these problems to consider what action is needed to address the challenges facing millennials. Here we focus on the labour market and outline a fundamentally new approach: an active labour market policy to confront the challenges of the 21st, not the 20th century. In particular this means a new focus on the security of, and opportunities within, work for young people, rather than a narrow focus on youth unemployment.

Typical weekly earnings for millennials who have turned 30 are currently £470, £15 less than that of generation X when they turned 30 between the years of 1996 and 2010. This represents an unprecedented break with the past and three main factors have driven this change. The first is the rise of atypical, insecure, work, the second is that a greater share of younger people are working in lower paying sectors, and the third is that fewer younger workers are moving jobs, and moving up the career ladder, than previous generations.

It will be years before we can fully understand how deep the labour market scars are from millennials spending long periods in insecure and low paid work. This report argues that simply assuming that these problems will disappear would be a dangerous mistake, therefore we outline what action needs to be taken now.

To address these three issues this report calls for a ‘Better Jobs Deal’ with three main elements.

  • Enhanced security:  guaranteed rights to a contract that reflects the hours people have worked to tackle exploitative zero-hours contracts, higher pay for many non-guaranteed hours and extending statutory maternity and paternity pay to the self-employed.
  • Better workplaces: For the first time active labour market policies should focus on firms not just people, with a priority on raising productivity and skills in three low-paying sectors where the share of young people working has risen significantly – retail, hospitality and social care.
  • Greater opportunity: a Better Deal for Movers, including financial support for those wanting to move to a better job (for example with initial housing costs), climbers (investment in training to rise up within their existing industry) and switchers (funding for stuck employees to move into higher-productivity sectors).