Concerning rise in NEETs driven by uptick in youth unemployment

This morning, the ONS published new figures outlining the number of young people who are not in education, employment or training (NEET). Overall, 788,000 16-24-year-olds (11.5 per cent) found themselves NEET in the last three months of 2022. And there has been a sharp rise in the number of young people who are NEET in recent months: the number of 16-24-year-olds who are NEET rose by 64,000 between July-September and October-December 2022, and this was entirely driven by an increase in the number of young people who are NEET and unemployed, which increased by 65,000. Although overall NEET rates remain low in historic terms – and are well below the rates seen in the aftermath of the financial crisis – this uptick in recent months is concerning and will be worth keeping an eye on over the coming months.

The share of young people who are NEET has increased in recent months, but remains below historic lows

Figure 1 shows the number of young people who are NEET, by their age group and type of economic activity. We can see that NEET rates for 16-24-year-olds have been rising steadily in the past few months, up from the pandemic low of 9.5 per cent in the spring of 2021 to reach 11.5 per cent in the final three months of 2022. This takes NEET rates back to the levels seen in the years leading up to the Covid-19 pandemic (the NEET rate was 11.1 per cent in the final three months of 2019). However, Figure 1 also shows that NEET rates remain much lower than in the early 2010s – for example, a decade ago at the end of 2012, 14.8 per cent of young people aged 16-24 were NEET.

Although NEET rates for both 16-17-year-olds and 18-24-year-olds have increased lately, 18-24-year-olds are much more likely to be NEET than 16-17-year-olds. This is unsurprising, since 16-17-year-olds are required by law to be in education, employment or training.  However, it is worth remembering that NEET rates for 16-17-year-olds vary widely across England: in the 2021/22 academic year, the proportion of 16-17-year-olds who were known to be NEET ranged from 0.2 per cent in Rutland up to 5.8 per cent in Redcar and Cleveland and North East Lincolnshire.

In the final three months of 2022, there were just 58,000 NEET 16-17-year-olds, compared to 730,000 18-24-year-olds. As we can see in Figure 2, among 16-17-year-olds, 4.0 per cent were NEET in the final three months of 2022 – up slightly on the last quarter (when the NEET rate was 3.3 per cent) but lower than on the eve of the Covid-19 pandemic (when 4.5 per cent were NEET).

Meanwhile, for 18-24-year-olds, the NEET rate is much higher, at 11.5 per cent. This is up 0.9 percentage points compared to the last quarter (when the NEET rate was 10.6 per cent), and also slightly above the pre-pandemic level of 11.1 per cent.

The rise in the headline NEET rate has been driven by rising youth unemployment

Within the NEET category, young people may be workless because they are unemployed (they are not working but are looking for work) or because they are economically inactive (they are not working, but are not looking for work or are not able to start work).

For much of 2021 and 2022, we had been seeing a fall in the proportion of 18-24-year-olds who are NEET and unemployed, down from the pandemic peak of 6.4 per cent at the end of 2020 to a record low of 4.1 per cent in the summer of 2022. On the other hand, the proportion of young people who are NEET and economically inactive had been rising, from a record low of 6.1 per cent in the spring of 2021 up to 8.5 per cent in the autumn of 2022. This is shown in Figure 3 below.

But this trend has reversed in the latest data: the rise in the number of young people who are NEET between July-September and October-December 2022 was entirely driven by higher unemployment. While the proportion of young people aged 18-24 who are NEET and economically inactive fell slightly, from 8.5 per cent to 8.4 per cent, the share who are NEET and unemployed rose from 4.1 per cent to 5.2 per cent.

In fact, when we consider the uptick in unemployment seen among all adults aged 16 and above (the headline unemployment rate has increased from 3.5 per cent in the summer to reach 3.7 per cent in the final three months of 2022), this is entirely driven by young people. As Figure 4 shows, the unemployment rate for young people aged 18-24 increased by 2.4 percentage points in the second half of last year, from 7.6 per cent in May-July 2022 to 10.0 per cent in October-December 2022; among all older age groups, there has been no similar increase.

This rise in unemployment can be seen among both young men and women. Between July-September and October-December 2022, the number of 18-24-year-olds who are NEET and unemployed increased by 31,000 for young women and by 29,000 for young men. (As Figure 5 shows, however, the proportion of young men who are NEET and unemployed is consistently higher than the proportion of young women who are NEET and unemployed.) By the final three months of 2022, 6.4 per cent of 18-24-year-old men and 3.9 per cent of 18-24-year-old women were NEET and unemployed.

But we should not be complacent about economic inactivity among NEET young people

Finally, although the proportion of young people who are NEET and economically inactive has fallen slightly in the last quarter, we should not be complacent. For young men, the current proportion of 18-24-year-olds who are NEET and economically inactive is close to a record high, at 7.7 per cent. This is much higher than in the 2010s – for example, a decade ago, just 4.6 per cent of young men were NEET and inactive.

This reflects a long-running shift in the make-up of youth worklessness, with more young men being economically inactive and long-term sickness and disability being an important contributor to this. In 2021, 59 per cent of young men who were economically inactive and not in full-time study were not working due to long-term sickness or disability; in addition, the number of young men who are inactive due to long-term sickness and not in full-time study has almost doubled since 2006, up from 45,000 to 88,000. This is concerning, since (understandably) those who are economically inactive due to long-term sickness are less likely to move into employment or study than those who are unemployed.

To conclude, we shouldn’t lose track of the fact that the number of young people who are NEET is low in historic terms – down from over a million in the aftermath of the financial crisis to 788,000 at the end of 2022. But there are still some areas of concern – namely the recent rise in young men and women who are NEET and unemployed, and the fact that the proportion of young men who are NEET and economically inactive is close to a record high. As such, it is important that policy makers do not narrowly focus on boosting the employment prospects of over 50s in the years ahead (as has been the recent approach from the Government). Instead, it is important to acknowledge that the groups of young people who are NEET have changed significantly since the early 2000s, and there remain over 750,000 young people who will require different types of support to enter good quality work or study. We’ll return to this issue in more detail over the coming year, as part of our work on the Health Foundation’s Young people’s future health inquiry.