Radical new approach to jobs needed to help young people ‘scarred’ by years of insecure, low-paid work, think tank says

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A radical approach is needed to tackle “fundamental flaws” in the labour market that have harmed the prospects of highly skilled young people, a new report has said.

Young people have been disproportionately affected by shifts in the nature of work in recent years, the Resolution Foundation said in the latest research for its Intergenerational Commission.

The think tank proposes a “Better Jobs Deal” to combat precarious work and to create better jobs in more productive industries – supporting people to change jobs.

More than half of people on zero-hours contracts are aged 16-34 and a quarter of people in their early twenties did not receive a pay rise for five years in a row after the financial crisis, the report said.

These experiences have “scarred” millions of young people, making them less willing to take risks in their careers that would aid national productivity, the Resolution Foundation said.

Insecure work, stagnant wages and a lack of moving between jobs all need to be addressed before they cause even deeper damage to young people’s careers.

The Foundation said that the effects of the downturn are still being felt and notes that, despite record high levels of employment, fewer people under 30 are planning to push for a pay rise this year than in 2008, when unemployment was as high as 8 per cent.

According to new polling by Ipsos Mori for the Intergenerational Commission, more than a third of millennials haven’t moved jobs because they don’t want to take the risk, they believe there are no jobs with better pay or career prospects out there, or they don’t think they have the skills to try.

The Resolution Foundation has proposed a range of measures.

The think tank said job security should be increased by guaranteeing rights to a contract that reflects the hours people have worked. It also said there should be higher pay for working hours that are not guaranteed, and statutory maternity and paternity pay to the self-employed should be extended.

The Resolution Foundation said efforts to raise the UK’s lacklustre productivity growth should focus on three low-paying sectors in which the proportion of young people has risen significantly – retail, hospitality and social care.

It also called for financial support, such as help with housing costs, for those wanting to move to a better job. Funding should also be provided for training those looking to progress within an industry, or those switching into more productive sectors, the report recommended.

The Foundation said it will be years before we fully understand the depth of the scars of long-term, insecure and low-paid work. To assume these problems will disappear would be a “dangerous mistake”, it said.

Stephen Clarke, senior economic analyst at the Resolution Foundation, said the approach to the labour market needed a “sea change”.

“Too often our labour market policy is focused on the problems of yesterday, not the challenges of today,” he said. 

“Dole queues have been replaced by hidden insecurity and stagnant wages. The challenge is no longer just getting young people into work, but increasing the security they have in that work and giving them the confidence and support to move jobs if that’s what they want to do.

“The UK has seen an employment triumph, but we now need a ‘Better Jobs Deal’ to face up to new challenges. If we fail to adopt new approaches, we risk leaving a generation of young people struggling to get by and progress.”