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Fewer UK Neets could boost GDP by £55bn

PWC Report: Potential long term boost to UK GDP from reducing NEET rates to German levels

PwC’s Young Workers Index, found the core European countries of Switzerland, Germany and Austria take the top three places in the newly-launched PwC Young Workers Index, which charts the success – or otherwise – of countries in developing the potential of their under-25 year olds.

The PwC Young Workers Index is a weighted average of 8 indicators that reflect the labour market activity and participation in education and training of people aged under 25 in 34 Organisation for Economic Co-operation and Development (OECD) countries.

The UK’s performance remains below the OECD average at 21st place out of 34, despite seeing an improvement since 2011.

Other government policy measures to boost scores could include raising the proportion of apprenticeships and vocational courses for young people, and more emphasis on social inclusion to reintegrate those in danger of dropping out of school and employment. The PwC report highlights, for example, several German government initiatives relating to this younger age-group, concluding that other countries could benefit substantially from adopting international best practices.

PwC’s economist John Hawksworth said, “Countries like Germany suffered much smaller rises in youth unemployment after the global recession because their systems of education, vocational training and apprenticeships minimise the number of young people falling through the labour market net.

“If the UK could reduce its NEETs [young person not in education, employment or training] rate to German levels, we estimate that the potential long-term boost to the UK economy could be around 3% of GDP, equivalent to around £55bn at today’s values.”

However, the firm welcomed the government’s plans to create millions of new apprenticeships, as this is encouraging businesses to work more closely with schools and colleges to ensure that young people have the skills they need to be employable.

Jon Andrews, PwC’s Global People and Organisation leader, concludes:

“Businesses can face short-term challenges in the form of skill shortages due to high youth unemployment, but this can also have a long-term impact in the form of lower productivity and less innovation. It is vital for businesses that they adapt their organisations to attract and retain new, young talent – by, for example, investing more in apprenticeships and professional training of younger workers.”


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