UK improving young workers' job prospects - report

11 October 2017

The UK could boost GDP by £43bn if it reduces the number of young people not in education, employment or training (NEET) to match Germany, the best performing EU country.

That would be equivalent to a GDP increase of around £7,500 per 18 to 24 year old, according to estimates in PwC’s latest Young Workers Index.

This year the UK reached its highest position since the Index began in 2006, climbing to 18th out of 35 OECD countries from 20th last year.

The UK’s improvement reflects lower youth unemployment and NEET rates as the economic recovery from the financial crisis has continued, but it still lags behind many other OECD countries, with Switzerland, Iceland and Germany leading the pack.

Performance is varied across England, due to differing labour market opportunities and levels of educational attainment.

The South of England has the lowest NEET rates amongst young people at 12 per cent in the South East, South West and East and 13 per cent in London.

This compares to 21 per cent in the North East, 16 per cent in the West Midlands, Yorkshire and the Humber and 15 per cent in the North West.

Matthew Hammond (pictured), PwC’s Midlands regional chairman and Birmingham office senior partner, said: "It’s encouraging that the UK has improved young people’s job prospects significantly in recent years, but the levels of young people not in education, employment or training are still too high relative to top international performers like Germany where there are better vocational education systems.

“Regional disparities in NEET rates also remain a concern. If the Midlands is to ensure regional prosperity in a post-Brexit world, more has to be done to ensure we close the gap with the South East and with our European competitors in places like Switzerland and Germany.”

Across the UK as a whole, 30 per cent of existing jobs could face automation over the next 15 years, so ensuring young workers have the appropriate education and training to take on jobs will be crucial to maximising the UK’s long terms economic potential.

Across larger OECD countries the estimated percentage of existing jobs at risk of automation for younger workers aged 16-24 ranges from around 20 per cent to 40 per cent, with 24 per cent of jobs at risk of automation for young workers in Japan, compared to 38 per cent in Germany and 39 per cent in the US.

Currently, nearly a quarter of 16-24 year olds (24 per cent) in the UK are employed in the wholesale and retail jobs sector where the potential risk of automation could be as high as 44 per cent.

Workers in this sector also tend to have lower educational attainment and qualifications, potentially limiting their ability to move flexibly between industries and into new jobs in response to automation.

Transport and manufacturing are other sectors facing high risks of automation, particularly for male workers with lower education levels.

In contrast, PwC analysis finds only around 5 per cent of young people are employed in industries demanding science, technology, engineering and mathematics (STEM) skills, which could be long term beneficiaries of new digital technologies such as AI and robotics.

Looking at data for a number of OECD countries including the UK, PwC found education levels are a large factor in determining who is most susceptible to the rise of automation.

Some 50 per cent of male young workers with educational attainment of GCSE-equivalent or lower, are at greatest risk of automation, compared to just 10% of men with university degrees.

Women are on average, believed to be less susceptible to automation, with around 30 per cent of those with GCSE equivalent or lower most at risk compared to 9 per cent of women with university degrees.

This reflects higher female employment in sectors like health and social care that are relatively harder to automate.

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