In 2023, just three years on from the start of the pandemic, there are reasons to be optimistic about young people’s standing in the labour market. Fears of a lasting rise in youth unemployment in the wake of Covid-19 have not come to pass, with the unemployment rate for 18-24-year-olds no higher at the start of 2023 than on the eve of the pandemic. Likewise, in the second quarter of 2023, the number of young people aged 18-24 not in education, employment or training (NEET) stood at 740,000, far below the post-financial crisis peak of 1.1 million (see Figure 1)
Figure 1: The number of young people aged 18-24 not in education, employment or training (NEET) in the UK remains far below the post-financial crisis peak
SOURCE: RF analysis of ONS, Young people not in education, employment or training (NEET), UK.
Rising worklessness due to ill health among 18-24-year-olds
But alongside the good news is evidence of a more worrying trend: a sharp increase in the number of young people who are not working due to ill health. The number of 18-24-year-olds in this category has near-doubled in the last ten years, rising from 94,000 in 2012 to 185,000 in 2022. Today, almost one-in-four workless young people are not working because of ill health, up from less than one-in-ten in 2012 (see Figure 2).
Figure 2: The number of young people not working due to ill health in the UK has risen dramatically in recent years.
NOTES: Workless young people are defined as those who are not in employment or full-time education.
SOURCE: RF analysis of ONS, Labour Force Survey
Spatial difference
Across the UK, 2.9 per cent of 18-24-year-olds were not working because they were unwell in the period 2020-2022 - but there is considerable variation between parts of the UK. Just 1.6 per cent of young people in East Anglia, and 1.7 per cent in both Inner London and Merseyside, were too unwell to work in 2020-2022, compared to 5.1 per cent in parts of the North East such as Darlington, Durham and Middlesbrough.
The most striking spatial difference when it comes to rates of youth worklessness due to ill health is that between large cities and smaller places. Young people living in core cities such as London, Cardiff, Glasgow or Liverpool are the least likely to be workless because they are unwell: in 2020-2022,1.8 per cent of 18-24-year-olds in London, and 2.0 per cent of 18-24-year-olds in other core cities, were not working due to ill health. This contrasts with 3.4 per cent of 18-24-year-olds living in places dominated by small towns or villages such as Derbyshire, Devon and South Wales.
Of course, the type of 18-24-year-olds living in cities is different to those living in smaller places, and there are two particularly important differences.
First, more than two-in-five young people in London and other core cities were full-time students, a much larger proportion than in small towns or villages - and full-time students cannot be classed as workless due to ill health, even if they have health problems.
Second, with the many opportunities they afford, cities are far more likely to attract graduates than smaller conurbations: more than a quarter of 18-24-year-olds in London and other core cities were graduates in 2020-2022, compared to less than one-in-six young people in small towns and villages.
Given that young graduates are very unlikely to be workless due to ill health, their uneven spatial distribution is a material reason why overall rates vary so much by place. When we look at young people who are neither in full-time education nor graduates, the gap between places narrows considerably.
Whitehall must do better
Any spell out of the labour market at a young age can have scarring effects on future employment prospects, but young people who are workless due to ill health are doubly disadvantaged by the combination of ill health and low qualification levels.
Policy makers should remember that worklessness due to ill health is not solely an older-adult issue: the 185,000 young people currently in this category, many of whom are ‘left behind’ in so many different senses, deserve better than that.
A twin-track approach
Taken together, this analysis suggests that policy makers must pursue a twin-track approach to support young people who are out of work because of ill health.
First, given that mental health problems are the most common reason for young people to be workless due to ill health, better - and more consistent - mental health support must be available at the earliest possible stage to prevent young people from falling behind in the first instance.
Second, alongside early health support, action is needed to help unwell young people catch up with their education later down the line.
Expand full-time and part-time FE for 18-24-year-olds
Given that four-in-five young people who are workless due to ill health lack qualifications above GCSE level, efforts to increase the number of young people attending university or doing apprenticeships miss the mark.
Instead, policy makers must invest to make it easier for adults to achieve GCSE and A Level skills (Levels 2 and 3) after leaving compulsory education, most obviously through funding courses leading to Level 2 and Level 3 qualifications for those aged 18-24, and by expanding access to maintenance grants and loans.
By Louise Murphy, Economist, Resolution Foundation