Budget 2013: The Future of Employment for Young People

It came as a surprise during the Budget for 2013 to hear that, despite being caught in the worst recession the UK has seen, employment has seen an increase of  more than 590,000 positions and is continuing on a steady rise compared to last year – a result that even leading economists are struggling to explain.

Despite this triumph, our next generation of workers, currently aged between 16-24, worryingly comprise the largest percentage of those who remain unemployed. Furthermore, the number of young people who are unemployed, in contrast to the rest of the population, is mounting more rapidly than any other sector of the public. In our last post we discussed the possible social consequences of long term unemployment in this age bracket and the urgent need for schools to provide pupils with an education that will equip them with the skills required to succeed in the workplace. However, this situation is sure to have a ripple effect on the wider employment circle – when we finally come out the other side of the current downturn, will we be facing fundamental skills shortages?


Previously we have seen that recessions have been followed by periods of severe skills shortages where economic growth has returned (everyone remembers McKinsey’s oft quoted – War for Talent of the late 1990’s). However, this is our worst recession yet and, therefore, will we also face the worst period of skills shortages in the next decade? What are organisations doing to prepare for this? Can you and should you invest now to avoid the issue in the future? Or does this require a more market wide move to ease regulations around employment, which would in turn make it easier for firms to invest in the development and progression of their staff?

Companies can find some solace in the budget’s proposed National Insurance Tax Breaks, which will help in reducing the tax burden on new hires, making the decision to take on new staff a little easier. Yet, is this enough? In an ideal world we would see a wider approach to investment being made in helping organisations to achieve confidence in the hiring, training and developing of their staff. Added to this, a reduction in employment regulation would make it easier to make quick decisions on a company’s staff base, injecting more life into those challenging hiring decisions within the 18-25 bracket.

That said, individual companies cannot address this issue in isolation; it will take a wave of renewed confidence in the marketplace to drive the level of hiring required to avoid what could be a growth inhibiting skills shortage / ‘War for Talent’ in the latter part of this decade.

Nick Walrond, Managing Director, Sanderson Recruitment