UKHospitality: Reduce employment taxes or risk youth joblessness ‘national crisis’

UKHospitality has called on the government to make it “economically beneficial” to employ and train young people, following a report which revealed one in eight 16- to 24-year-olds are not in education, employment or training.

The publication of the interim Young People and Work independent report has warned of an “urgent national crisis” that presents the risk of a “lost generation”.

The report, by Alan Milburn, found that nearly 60% of those who are not in education, employment or training (NEET) are “economically inactive” and not seeking work.

Additionally, six in 10 young people who are NEET have never had a job, up from four in 10 in 2005.

The report attributed this problem, in part, to a lack of job opportunities, including in the hospitality industry. The sector provides approximately four in 10 young people with their first roles in the workplace, but vacancies have halved in the last four years, according to the Office for National Statistics.

The report stated: “At the very point when they should be starting adult life, gaining confidence, building skills, learning the habits of work and taking their first steps towards independence, too many are becoming detached from education and employment altogether. We are at risk of a lost generation.”

In response, UKHospitality said the government must make it economically viable for employers to create roles for young people, and cited the dramatic fall in roles following the 2024 budget, which saw rises in National Insurance Contributions and the National Living Wage.

Chief executive Allen Simpson said: “This interim report is clear sighted analysis of how significantly increasing employment costs directly reduces job opportunities, particularly for young people.

“The rapid loss of around 100,000 hospitality jobs after the 2024 Budget and the increase to employer National Insurance Contributions was the canary in the coal mine and should have been recognised as such by the government.

“The solution is to reduce the cost of employment for hospitality businesses. As the biggest youth employer and driver of social mobility, thousands of job opportunities can be unlocked as a result. The government needs to make it economically beneficial to employ young people once again.

“As Alan Milburn has said, there needs to be a shift towards getting more people work ready. We agree wholeheartedly, and already have in place supported pathways into work, like the Hospitality Skills Passport, which directly helps people who are out of work into hospitality jobs.

“Utilising this kind of pre-employment training is critical, as well as delivering reform of the Apprenticeship Levy to allow employers to more effectively use their levy funds to support this work.”

Milburn presented a complex picture of factors impacting young people’s routes to employment including the increased cost of hiring, which has reduced the cost gap between employing someone new to the workforce and someone with prior experience.

Within the report Milburn said: “If the cost of hiring someone who is 19 moves closer to the cost of hiring an older worker with several years’ experience, some employers will choose the safer option. The point is not that young people should be paid less. It is that when the cost of entry-level labour rises, the case for taking on someone inexperienced becomes harder.”

Increased costs can also increase the expectation on new workers, which Milburn heard were not being met. He said: “I heard from employers, large and small, across hospitality, retail, construction, social care and professional services. They are not hostile to young people. Many are desperate to hire them. What they described was a growing gap between what the workplace demands from day one and what a significant proportion of young applicants are equipped to provide. This gap is not the result of laziness; but of anxiety, of inexperience, of a system that may have given them qualifications, but not the chance to learn how a workplace works before being expected to perform in one.”