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UK to create 'hundreds of thousands' of jobs for young as part of £2bn work placements scheme

Tom Belger
Finance and policy reporter

Britain's prime minister Boris Johnson and chancellor Rishi Sunak last month. Photo: Heathcliff O'Malley/AFP via Getty Images

Firms and unions have welcomed a UK government pledge to create “hundreds of thousands” of high-quality jobs for young people to stave off a sharp rise in youth unemployment.

The Treasury confirmed a new £2bn ($2.5bn) ‘Kickstart Scheme’ will be launched in August, subsidising employers who offer six-month work placements for 16- to 24-year-olds.

Chancellor Rishi Sunak announced the measures on Wednesday ahead of his speech in the Commons on the government’s wider hopes of reviving the economy and preventing another spike in unemployment.

There are widespread fears unemployment will continue to mount amid weak economic demand, cutbacks to the furlough scheme and young people leaving education this summer. Unemployment could hit 11.7% by the end of the year, according to figures released by the Organisation for Economic Cooperation and Development (OECD) on Tuesday.

READ MORE: UK chancellor to launch £3bn green jobs package

Sunak said in a statement released by the Treasury late on Tuesday: “Young people bear the brunt of most economic crises, but they are at particular risk this time because they work in the sectors disproportionately hit by the pandemic.”

The Kickstart Scheme will be targeted at young people who are claiming universal credit and “at risk of long-term unemployment.” The government will cover the cost of paying the national minimum wage for 25 hours a week, with employers able, though not required, to pay more on top.

The Treasury hopes the scheme will give young people the chance to build workplace skills and improve their chances of securing long-term jobs.

The announcement was welcomed by business and union leaders. Carolyn Fairbairn, director-general of the Confederation of British Industry (CBI), called it a “much-needed down payment in young people’s futures.”

READ MORE: Unemployment could hit almost 15% if UK faces second wave

She said the scheme could help “lessen the potential scarring impact” of the crisis, with research showing unemployment can have damaging long-term consequences for young people’s careers.

Fairbairn added that the government must work with employers to roll out the scheme “simply and at speed.”

Frances O’Grady, general secretary of the Trades Union Congress (TUC), called the measures a “good first step.” But she warned the government must “avoid job displacement,” ensuring the scheme creates additional roles that would not be created otherwise.

The TUC has called for a higher “real living wage,” training and focus on key areas like decarbonisation in any youth jobs scheme.

READ MORE: What to expect from Rishi Sunak’s summer statement

The Treasury has already confirmed Sunak will also unveil a £3bn ($3.7bn) green jobs package. Critics said the chancellor should have gone further, but it is hoped tens of thousands of jobs will be created making public buildings, social housing and private homes more energy-efficient.