Recently, there has been good news reported on youth unemployment in the UK. According to the ONS youth unemployment in the first half of the year has fallen approximately 43,000 to 950,000. Is this improvement? Yes. Is this a good number? No. Approximately 15% of Britons between the ages of 18-30 are unemployed, many of them left to suffering the humiliation of living at home with mum and dad, others left to living off the dole with a very useful history or interpretative studies degree (I chose the former of the extremely useful majors) to protest the unfairness of the system or the last group of people to accept part time work at your local McDonald’s or as your local cannabis dealer. Anyway you look at it, there are too many active minds with idle hands, and as the old expression goes “idle hands are the devil’s work”.
As is the accepted modern paradigm, for any time there is a problem the solution is of course the government. (Remember what the old Texan US President Lyndon Johnson said: “if the government can’t fix it, it ain’t a problem!”). So the question then becomes what is the Conservative led coalition doing to combat youth unemployment? The answer, besides the general economic policies of the Chancellor (which this blog has spoken of favourably for the most part), the solution of the government has been two policies: 1. Apprenticeships and 2. The Start Up Loan Scheme.
The government has done the right thing with apprenticeships. I truly believe without apprenticeships youth unemployment would be much, much, worse in the UK. Boris Johnson specifically should be applauded for encouraging apprenticeships throughout London. The youth of London are responding to the opportunities, by 2016 there will approximately 250,000 apprenticeships offered in the greater metropolis. What is good about apprenticeships is that they benefit the job seeker and the company. For the company, it allows them to test bright young people to see if the raw talent would translate to success at their company without them having to make a significant financial investment/risk up front. For the job seeker it allows an opportunity to put one’s “foot in the door”; to gain connections and gain job experience and skills. I myself have been a part of the beauty of this type of system. In the United States, law students “clerk” (if they are lucky enough to find the ever dwindling opportunities available) at different law firms or under different lawyers before they become an attorney. I am working at my third clerkship in law school and that combined with lowly work I did in law firms before law school has given me an extremely broad variety of skills, experiences and connections that will benefit me once I begin my career. Thus, the government should be applauded for not listening to those (i.e. the Labour party, occupy geographic locations etc.) who opposed the scheme and for giving Britain’s youth these apprenticeship opportunities.
The start-up loan scheme for entrepreneurs however, I must take issue with. I understand the desire to have a nation filled with entrepreneurs and innovation and to have Britain have a silicon valley or a Google that rivals the United States. Do not misunderstand me, entrepreneurship is a great thing and has been what empowered the Anglo-American civilisation to being the technological innovators and free people that we are. However, using tax payer money to loan to young people is misguided for a couple reasons. 1. Is there any reason why a government loan is better than a private one? In the United States the federal government recently nationalised student loans. This week the government decided to raise the interest loan rate as a way to generate revenue. The US students have now become just another source for the government to make money. The UK government should not make entrepreneurs a revenue generator, especially considering the failure rate of entrepreneurial projects. While I am not saying David Cameron’s government would do such a thing, I would not put that past a red light running Ed Balls’ budget. However, most importantly there is already private opportunities to expand and market one’s business whether you are young or old in the private sector! There are many places already to expand and grow your business without taking a loan from Westminster. Here is an app for instance that could be particularly helpful to work with other companies and network to best expand your business, http://www.jelfsmallbusiness.co.uk/, and there are many others. There are also many banks that are willing to invest in today’s bright innovators and many corporations that will buy your idea (such as when Facebook bought instagram) the key is just getting those ideas into the marketplace. Furthermore, according to reports entrepreneurs have been slow to take advantage of these loans thus far.
Lastly, it is important to keep Britain’s condition in perspective with others. In the US youth unemployment is 16.3%, slightly higher than in the UK. With workers in the UK and abroad working longer than ever the condition is likely to continue and might be even worse for young people in the future. The UK government’s solution of encouraging a society that values and rewards hard work is a good one which most young people seem to understand and support as I discussed in “Thatcher’s Children”. The government’s apprenticeship program is good for getting the British youth off the sofa and into to the office and will pay off in the long run. However, the government loans while well intentioned, seem ineffective at best and a waste of taxpayer money at worst. While a government can do great things for its people let us never forget that it is from the people themselves that innovation arises and that truly advances a society to its greatest achievements.