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UK – Government incentive to hire young people

24 July 2013

The Department for Work and Pensions (DWP) launched a wage incentive scheme to encourage companies to recruit people between the ages of 18-24, The scheme is called the ‘Youth Contract’ and ministers have claimed that more than 20,000 youths have been offered jobs as a direct result.

The wage incentive is available to companies that employ young workers for at least 16 hours per week in a post lasting at least 26 weeks. For each employee working between 16-29 hours each week the company receives £1,137.50. For those working 30 hours or more the company receives £2,275. The money is paid 26 weeks after the employee starts work.

Mark Hoban, employment minister, said: “Youth unemployment has fallen by 59,000 since the Youth Contract was launched and tens of thousands of people have benefitted from work experience, apprenticeships, or the wage incentive.”

When contacted by Staffing Industry Analysts, the DWP was unable to provide details of how long young people were retained by their employer after the 26 week payment threshold, advising that it was too soon to comment on retention.

Of the industries taking part in the wage incentive, the highest proportion of Youth Contracts have been in Manufacturing (18%), Wholesale and Retail (16%), and Accommodation and Food Services (12%). The private sector accounts for 84% of employers taking part in the scheme, with 9% in the public sector, and 6% in the voluntary or non-profit sector. 

Commenting on Youth Contract statistics published by the DWP, Frances O'Grady, general secretary of the TUC, said: "It is far too early for the government to be hailing the Youth Contract a success. Closer reading of today's figures show that of the 7,810 people who started on this scheme 26 weeks ago, only 2,870 found long term jobs. In other words, 63% of those who started left employment before six months. There is still a huge issue with employer take-up. Research published last month shows that nearly one in three firms is still not aware of this initiative and of those that are, fewer than one in five intend to make use of it."

A JobsOutlook survey published in August 2012 predicted that four out of five employers wouldn’t take part in the incentive. The DWP has admitted that companies were slow on the up-take of the incentive; however up-take was now on a clear upwards trajectory.

The Youth Contract was launched in April 2012 with a budget of £1 billion. It is hoped that the scheme will provide nearly half-a-million jobs for 18-24 year olds. 


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