The Chamberlain News

Big variations in youth unemployment across WMCA area – EY report

There is a huge disparity in the numbers of young people being employed across the UK’s cities and regions, including in the West Midlands, with Wolverhampton identified as having one of the highest rates of youth unemployment in the country, compared to Coventry which had one of the lowest rates, according to a new report from EY. 

The study by EY (Ernst & Young Global Limited) in association with the EY Foundation (an independent UK charity) says this could have an impact on both the region and wider UK’s aspiration to achieve ‘inclusive growth.’

The statistics underline the difficulties faced by leaders of the WMCA – and the incoming mayor – tackling varying economic and employment patterns across the area.

The report reveals that the West Midlands has a youth unemployment rate of 15.5%, higher than the UK average of 14.4%, but lower than the North East which had the highest rate of any region at 18.3%. The East Midlands had one of the lowest rates in the UK at 11.7%. The East of England had the lowest rate at 11.2%.

While the variations in youth unemployment between regions are significant, they’re far exceeded by those between the UK’s cities. In every region, the majority of cities for which data is available had youth unemployment rates higher than their regional average. In the West Midlands, three of the five cities analysed had rates above the West Midlands average of 15.5%: Wolverhampton (27%), Birmingham (22.5%) and Stoke (17.3%). This compares to significantly lower rates in Solihull (11.0%) and Coventry (8.2%) – Coventry had one of the lowest youth unemployment rates in the country.

Across the UK, the report revealed an excess in the unemployment rate for 16-24 year olds. Between March and May 2016, youth unemployment rates were 28.7% for 16-17 year olds and 11.6% for 18-24 year olds in the UK.

It was recently reported that youth unemployment in Birmingham has more than halved in the past four years. 

Sara Fowler (pictured), senior partner at EY in the Midlands, says:

Youth unemployment rates have fallen from the peaks we saw during the recession, when 40% of the UK’s 16-17 year olds were facing unemployment. However, a stubbornly high number of young people remain excluded from the labour market, which could be further exacerbated by a period of weaker economic growth in a Brexit environment.

Looking at the West Midlands, the region has a higher than average youth unemployment rate (15.5%), but what stands out are the wide-ranging variations in rates between the region’s biggest cities – with Wolverhampton one of the highest (27%) and Coventry one of the lowest (8.2%). These regional differences underline the importance of a coordinated response from Government and business to tackle the issues locally as well as nationally. This could potentially be accompanied by more devolution of skills and education to the Midlands Engine.

According to the report, youth employment levels across the UK declined by 166,000 from 2004 to 2015, with the biggest fall seen in the manufacturing sector, with a decline of 109,000 (28%) over the same period. In the last decade, construction (25%) and financial & business services (4%) have also reduced their employment of young people.

The two sectors that currently employ the highest proportions of young people – relative to their total employment – are set to grow. The report forecasts that between 2015 and 2030 the UK’s employment in distribution, hotels and restaurants will grow by an average of 0.4% a year, matching the forecast growth of the UK’s total employment. Over the same period, the report forecasts employment growth in other services by 0.9%, strongly outpacing the average across UK sectors.

Maryanne Matthews, Chief Executive of EY Foundation, said:

“Maturing workforces, demands for new skills in a knowledge economy, and a projected growth in the number of high-skilled jobs over the next few years, means that the need for employers to diversify talent has become a business imperative. Flexible and dynamic businesses rely on continuously attracting new skills and experience and yet youth unemployment remains a significant problem in the UK.

It is imperative that UK employers open their doors to invest in developing the skills of young people. By offering paid work experience opportunities to young people, this could lead to jobs in the future, reduce unemployment rates and help to address the UK skills gap. The more that employers play an active role in developing young people, the more we can help every young person to have better working prospects now and in the future.

The EY report, Youth Unemployment in the UK: skills and employment prospects, was commissioned prior to the EU Referendum vote.