The Chancellor’s pledge to extend employer National Insurance exemptions to include apprentices under the age of 25 should be commended. Employer National Insurance contributions are a tax on jobs.
It is right that at a time when over three-quarters of a million young people are unemployed, the Government should do all it can to support those businesses looking to give young people a chance in life. Today’s announcement will go a long way to encouraging businesses to hire young people – and will help reverse the recent decline in apprenticeship starts.
Key apprenticeship providers, such as Pera Training, and leading youth unemployment campaign, Million Jobs, have long been calling for employer National Insurance contributions for young people to be scrapped. Osborne’s announcement shows he has taken those messages on board.
But more needs to be done if the Government is to promote apprenticeships and stem the tide of youth unemployment. For those young people finishing school, their next steps will have a substantial bearing on the rest of their lives. But the majority remain wedded to the idea that university is the key to a successful and prosperous future, unaware of other avenues open to them. While for many university remains the most suitable option, this is not the case for all.
The prospects for today’s young graduates are diminishing. Since 2005, apprentices under the age of 25 have broadly enjoyed more favourable levels of both employment and unemployment than graduates. Well over one-third of all graduates have lifetime earnings below those of the average higher apprentice, while nearly half (46 per cent) of those from post-1992 universities earn less than higher apprentices.
Despite this, apprenticeships are struggling to acquire the social status they deserve. Studies have shown school-leavers are more than twice as likely to associate university, rather than apprenticeships, with providing a good long-term earning potential and job prospects. While, fewer than one in six say they are preferred over university by their parents and friends.
Tackling these misperceptions is vital if policymakers are serious in their determination to tackle the country’s youth unemployment and to equip young people with the skills they need to meaningfully participate in Britain’s 21st century workforce.
Today’s announcement marks an important step, but there is more the Government must do to promote awareness of the opportunities modern apprenticeships offer.