There is a section of our society that live largely insecure lives, have low incomes, poor job prospects and as a result less spending power. That group is young people. Traditionally young people have profited from their ability to labour, to work longer, faster and harder than their older counterparts. But the changing nature of work means automation and computerisation has combined with a shift over generations – from manufacturing to service and low-skilled jobs in call centres and retail – to reduce the prospects of young people to crisis levels right across Europe and the western world.
In the US and Italy, disposable incomes for young people have fallen back to levels of almost 30 years ago – which has never happened before except in the aftermath of world war. Mediterranean nations have unbelievably bad levels of youth employment, but it is a problem here as well. In the past year youth employment hit 57.4 per cent in Scotland, having increased in the past four years to move from behind the UK average to ahead of the employment figure across the UK of 53.8 per cent. Across Europe, the youth employment rate is only 33 per cent, with countries like Spain, Italy, Portugal and Greece facing losing a generation.
This coincided with the Scottish Government’s creation of a Youth Employment Minister in 2011, but clearly more needs to be done as almost half of young people can’t find work and those who do have earnings not only lower than other generations but lower than ever before. According to the Resolution Foundation, our young generation earned £8000 less during their 20s than their immediate predecessors and so will be the first generation to see their lifetime earnings fall in real terms. This at a time when in the last 10 years (since the crash) average house prices have increased across the UK by almost £100,000. This means that the majority of Generation Y and Generation Next will never be able to own their own house and will see their rents rise far faster than wages due to increased demand for rented properties.
Now add to this the fact that Brexit will further depress wages and the fall in the value of sterling will continue to increase inflation, especially on imports such as electronics and clothing – the areas young people spend more on than any other age group. In Scotland average full-time wages for young people aged 18-24 are likely to be under £11,000 and they can’t expect to hit the national average for income until they are well past 30. That just doesn’t work because our entire economic system requires young people to be economically active and generate income tax at a level that pays for pensions.
This means that personal debt is becoming a real problem for 32 per cent of those aged 18 to 24, who account for 21 per cent of the UK’s over-indebted people but make up only nine per cent of the population, whereas the pensioners who their taxes need to pay for make up 18 per cent of the population. As our American friends would say, “You do the math”.
So it’s fair to say that millennials will lead very different lives from their parents, many living at home much longer, maybe even seeing the re-emergence of wider family groups of multiple generations living together again (the norm till the turn of the 20th century). They have given up on democracy and there are micro-trends indicating that many are dropping out of mainstream culture either through drugs and drink or by not owning TVs and ignoring newspapers and rejecting fake celebrity. This trend will increase in Generation Next, aka Generation K, after Katniss Everdeen, the teenage hero of the Hunger Games movies who, err, kills most of the adults and political elites. Historically, all abandoned generations rebel and start revolutions but Generation Next seems just to be settling for feeling depressed and lost rather than angry. It won’t last.
So, clearly, Scotland needs more young people and we need to provide them with better prospects, higher wages, more skills and homes they can afford. If we get this right then we can create a comparative economic advantage. With austerity we can’t afford to build the affordable houses. Bullshit jobs don’t need highly skilled people so companies are not investing in skills, and those that do are offering low-paid apprenticeships (which are still worthwhile as more than 90 per cent of apprentices currently go into work or further training and apprentices could earn £150,000 more on average over their lifetime compared to those just with vocational qualifications at Level 3. Big corporations, however, are using a lot more unpaid interns, which I view as simple exploitation.
Regular readers will know I want to redesign the entire economic system over time but what can we do right now? We can start with a significant increase in incentives for companies to train and recruit younger employees through apprenticeship-style schemes –targeting areas of skills shortages in traditional trades and skilled professions that are predicted to be less at risk from automation. Scotland’s economy needs more young people and skilled workers (under 30) mainly for the IT, gaming and biotechnology sectors. So Scotland needs to be able to tailor immigration to suit the needs of its economy, not just a one-size-fits all UK policy, and so be able to encourage skilled EU citizens to move to Scotland (even after Brexit).
Our young people need a pay rise and so we need to apply the real Living Wage Foundation rate (currently £8.45 an hour) as well as make it a legal requirement for all who are not on apprenticeship schemes. Any immigration targets set by Westminster should exclude international students who wish to study and then they should be able to live and work in Scotland as they used to do under old work-study rules.
Going even further, how about a graduate business start-up programme to retain young talent in Scotland? This would take the form of a redeemable voucher and assistance programme for all graduates of Scottish universities and colleges/apprenticeship schemes to help them establish a business in Scotland within 10 years of returning if they leave. Supported entrepreneurship is the answer for a generation for whom traditional employment will be an insecure and low-value option.