BUSINESSES want to hire young people, and recognise the unique contribution that younger workers can make to their business.
However it is often the case that hiring a young person is too risky because they lack experience and training them can be time-intensive.
Employers will tend to favour more skilled and experienced applicants – and while they do sympathise, their primary function is to run a business, which means making business decisions.
There has to be a change, as the transition between education and employment has not been working for some time.
The latest statistics show that there are 917,000 unemployed young people. To put this in context, the youth unemployment rate remains at 19.9 per cent – just 0.9 per cent lower than a year ago.
This means that 16 to 24 year-olds are three times as likely to be unemployed compared with the rest of the UK population.
The stark fact of the matter is that if we don’t act now, we face the very real possibility of leaving behind a generation of young adults who will have missed vital years of work experience.
Studies show that many will suffer higher unemployment, worse health and lower wages throughout their lives as a result.
At the British Chambers of Commerce, we have proposed measures to make young people more attractive to business.
We know there are existing incentive schemes in place, like the Apprenticeships Grant for Employers (AGE), but there are no current plans for this to continue beyond the end of 2014.
We feel that the scheme should be extended for a further two years, especially as demand for apprenticeship vacancies has outstripped supply by as much as 12 to one.
We believe that businesses need to be encouraged to take a risk and invest in someone who is less experienced or has been unemployed for some time.
So, as a short-term fix, before the national insurance exemption for under 21s kicks in next April, we are proposing a £1,000 payment to firms who hire a long-term unemployed young person under the age of 24 or a new apprentice.
Doing this would also send a strong message from government to businesses that now is the time to invest in the young people that could become their most valued employees.
But there are other ways of getting young people into employment, such as by promoting entrepreneurship among school and college leavers and graduates.
Young entrepreneurs are often innovative and dynamic – just look at Facebook’s Mark Zuckerberg or Britain’s own Nick D’Aloisio who at 15 was the youngest person ever to receive venture capital funding for a technology business. He later sold it to Yahoo for $30m.
Young entrepreneurs are also more likely to hire other young people and often have more aggressive growth plans than older business owners.
For many, however, there is a glass ceiling as they cannot always get growth funding from the banks and other finance providers who have proven themselves unwilling to lend.
Given the right support, this ambitious cohort has the potential to increase the number of mid-sized businesses in the UK, and eventually the number of large businesses.
Therefore, we are calling on the Chancellor to increase the tax relief available through the Enterprise Investment Scheme from 30 per cent to 50 per cent for those that invest in businesses run by under 24s.
This will help growing, young businesses to attract investment capital that is unavailable from other funding providers, and encourage more young people to consider enterprise as a career choice.
At just under £400m, the estimated cost of these measures is less than seven per cent of what the Government spent on overseas aid last year, and is just a fraction of the projected £7bn departmental underspend for 2013 to 2014.
The Government’s own study found that for every apprenticeship created through the scheme, the Treasury would collect at least £31,360 in additional tax over their working life. In a world where the need is often to “speculate to accumulate”, this tiny amount of expenditure would reward the Treasury coffers for decades to come. We know that many politicians are already looking ahead to the General Election, but the huge gap between Britain’s young people and employers cannot wait.
We recently published our Skills Manifesto, which set out ways to radically transform the education system to better equip young people for the world of work. And while the long-term challenges should not be ignored, the political class needs to act urgently to help young people now.
The Chancellor must use today’s Budget to make the workforce of tomorrow the priority of today.
John Longworth is director general of the British Chambers of Commerce.