As part of the summer statement expected on Wednesday, Rishi Sunak is expected to launch a £2bn job creation scheme for under 25s.
In an attempt to tackle the rising youth unemployment, the Chancellor will propose plans to fund six-month job placements for 350,000 young people. The government will pay for employers to hire an 18 to 25-year-old at minimum wage for 25 hours a week.
The minimum wage is £4.55 for under 18s, £6.45 for 18 to 20-year-olds, and £8.20 for 21 to 24-year-olds. employers will have the choice to top wages up.
“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,” said Sunak.
“We also know that youth unemployment has a long-term impact on jobs and wages and we don’t want to see that happen to this generation. So we’ve got a bold plan to protect, support and create jobs – a Plan for Jobs.”
The scheme will be open for applications in August and will cover England, Scotland and Wales.
The chancellor has acknowledged that young people are most likely to be hit in the Coronavirus pandemic by employment. Young people are the most likely to be furloughed, a scheme which will end in October and risks many job losses.
He is expected to say on Wednesday: “We also know that youth unemployment has a long-term impact on jobs and wages and we don’t want to see that happen to this generation.”
The number of 18 to 25-year-olds who applied for Universal Credit in the first two months of the crisis rose by 250,000 to almost 500,000.
“It is very welcome that the government has opted for a bold and ambitious scheme, with £2bn potentially meaning jobs for around 350,000 young people. This is exactly the kind of approach needed, learning the lessons of what worked in the financial crisis,” said an economist at the Resolution Foundation thinktank, Kathleen Henehan.
“History also shows that it is crucial that these jobs are created quickly, with local authorities crucial in making that happen at anything like the scale the government intends. Three hundred and fifty thousand new jobs would be three times as many as were created under the Future Jobs Fund following the financial crisis, so delivery on this scale will be a huge challenge.”