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Study suggests that the Government have over-estimated benefits of raising leaving age
According to a new study for thinktank Policy Exchange, the Government have over-estimated the benefits of raising the education and training leaving age to 18 and massively underestimated the costs. The report “Diminished Returns: How raising the Leaving Age will Harm Young People and the Economy”, by former government advisor, Professor Alison Wolf, coincides with the debate in the House of Commons (14 January) about the Education and Skills Bill.
Government figures predict that employers will take the requirements for under-18 workers to participate in 280 hours of guided learning annually in their stride with a projected cost of £7 million to the economy. However the report points out that 70% of employed 16 and 17 year olds work for small employers and, faced with the possibility of inspections and penalty notices, the common response will be to stop hiring the young. Professor Wolf shows that the loss of a third to half of jobs in the youth labour market would lead to production losses of between £236 million and £447 million annually in 2016/17 prices.
Commenting on this, Professor Wolf said: “The policy will almost certainly have a serious, negative impact on the job market for young people…the large majority of young people are employed in the private sector, by small and medium sized companies who cannot afford to have employees disappearing on day release, or not available for sections of the day.”
The report also points out that the Government’s obsession with qualifications shows a misunderstanding of a labour market where employment has a positive effect on future employment prospects. Hardly any of the entrants are expected to take A-levels – qualifications which have a proven impact on future earnings. Instead they will enrol for “modern apprenticeships” and vocational qualifications in FE colleges. However, according to the research consensus, most of the non-A-level qualifications offered to young learners will not increase their future earnings.
Professor Wolf explains: “Many of those displaced from employment to worthless qualifications will be, by definition, those who are not university-bound; many will be employed, by small employers, in areas which are themselves economically unsuccessful.
These are surely exactly the sort of young people whose employment we should be protecting, not destroying.”
Professor Wolf also shows how the benefits of the Bill could be just £285 million rather than £2.4 billion ,direct costs could rise to £1.5 billion rather than £774 million and production losses could hit £477 million. Overall, therefore, Wolf calculates that the policy could lead to losses of £1.7 billion to the economy rather than the annual gains of £1.6 billion promised by the Government.
Another point that the study picks up on is that the Government has failed to take into account “NEETS” – those not in employment, education or training who move in and out of employment and training. Wolf asks “Are young people who enrol on a course now to be forbidden to drop out before the end of the year?….The failure to recognise the fluid nature of young people’s activities is part of a general failure to think through this policy.”
Finally the report points out that the money would have far more impact being spent on primary education to prevent young learners from becoming NEETS. Sam Freedman, Head of the Education Unit at Policy Exchange, concludes saying: “The money that will be squandered on the measures in the Bill could be put to many better uses – not least the Government’s underfunded plan to give failing primary school students individual tuition.”
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