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Youth unemployment and changes to Jobseeker's Allowance

Posted on September 17, 2014 by Daragh McCarthy

Currently, there are 24 unemployed people for every job vacancy. This is a problem for everyone looking for work, but makes it particularly difficult for young people who tend to have less work experience.

Budget 2014 reduced Jobseeker’s Allowance (JA) to recipients less than 26 years of age. The adjusted rates are 30 percent lower for new entrants aged 22-24 and 23 per cent lower for those aged 25. They came into effect on 15 January 2014. The measure was presented as a way to “incentivise young jobseekers to avail of education and training opportunities and [to] try to avoid them becoming welfare dependent from a young age.” The Department of Public Expenditure and Reform (2013) estimate that €32 million will be saved by the measure over the course of 2014.

The recent changes expanded on a number of adjustments to the rates and age bands applicable to Jobseeker’s Allowance that began in the Budget announced in April 2009. The intervening years have seen various welfare rates were being reduced and new revenue raising measures introduced. However, just considering the changes to social welfare rates alone, young people looking for work have shouldered the burden of adjustment from the early stages of the economic crisis. Table 3 gives provides detail on the number of young people impacted by adjustments to the weekly rates and age bands applicable Jobseeker’s Allowance prior to the new measures being introduced.

It is unclear how many people were affected by the changes announced in Budget 2014. As of the end of March 2014 there were 57,900 Jobseeker’s Allowance receipts under 26 years of age—with 36,800 in receipt of a reduced rate of payment.

The data suggests young people are not particularly susceptible to remaining in receipt of Jobseeker’s Allowance on a long-term basis. Figure 1 shows the number of young people claiming the payment for a year or more rose dramatically in the second half of 2009 compared with the opening 6 months of the year. Since then, the 18-24 age group has regularly experienced the greatest rate of reduction in number of long term claimants compared to older cohorts. Demographic factors undoubtedly influence this pattern; however, it suggests, that similar to other age groups, young people were unwilling to remain welfare dependent for a long period of time. The need for additional activation measures for this age group is questionable.

Figure 1 Percentage change in the number of people claiming JA for more than one year, by age

JAunder26Blog 

Looking at a recent evaluation of FÁS/Solas training schemes shows that prior to the recent incentivisation measure young people were willingly participating in training, with most still unable to find work upon finishing their course. The profile of people participating in training found the 15-24 cohort was over represented in the courses examined; at the time of the survey this age group represented 22 percent of the unemployed population, but 33 percent of the trainees partaking. Similar to other participants, young trainees are reported to be willingly participating in training. The report notes “the vast majority of those who registered with FÁS in the summer of 2011 did so of their own volition… only 11% of trainees were directed by the Department of Social Welfare.”

The lack of jobs is a key issue. When evaluating the employment outcome following completion of the training the survey sought to find out how many of those finishing the course had found a job “at some point” during the 12 month period since exiting the training. Even by this accommodating employment metric only 36 percent in the 15-24 had found employment; the lowest success rate amongst all the age cohorts. Many factors could be influencing this poor outcome—education level prior to commencing the training and length of time unemployed, for instance—but cutting Jobseeker’s Allowance is unlikely to address any of the issues facing young people in the labour market. . The absence of jobs, not motivation, is the central issue for young people looking for work.

A related NERI inBrief, Examining the Need to Reduce Jobseeker’s Allowance for Young People  is available here.

Posted in: Jobs

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