UK could boost GDP by £55 billion by developing the economic potential of younger people
If the UK could reduce the rate of UK people aged 20-24 not in employment, education or training (NEETs) to match Germany, the best performing EU country, UK GDP could be boosted by 3% or around £55 billion, according to new PwC analysis. PwC’s new Young Workers Index is a weighted average of eight indicators – including employment, education and training – that reflect the labour market impact of workers aged 20-24 across 34 OECD countries. The UK’s performance in the index has improved since 2011 but, overall, it has remained below the OECD average between 2006 and 2014 (see chart below). This is consistent with other evidence that young people in the UK have been particularly hard hit by the economic downturn.
John Hawksworth, PwC’s chief economist and co-author of the report, said:
“Our Young Workers index identifies which countries are leading the way in developing young people. It seems that core European countries like Germany, Switzerland and Austria are the best role models for this, while the UK is only a middling performer.
“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 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 £55 billion at today’s values.”
As well as the UK, the index also estimates the potential long-term boost to other OECD economies if they can match Germany’s NEET rate. Table 2 shows that potential gains could range from around 1% of GDP in Sweden and Denmark, up to around 3% of GDP in the US, the UK and France, with the highest potential gains being around 7-9% of GDP in Turkey, Italy, Greece and Spain.
John Hawksworth, PwC’s chief economist, added:
“The index highlights both opportunities and challenges for business and government. The UK government has announced plans to create millions of new apprenticeships, and is encouraging businesses to work more closely with schools and colleges to ensure that young people have the skills they need to be employable. These measures are important because research shows that failing to invest in young people’s skills has long-term economic costs in terms of lower lifetime employment and productivity levels.”
Jon Andrews, head of PwC’s global people and organisation practice, said:
“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.”
Full press release on pwc.blogs.com
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