Government subsidises young workers to ease jobs drought

LONDON Fri Nov 25, 2011 7:16am GMT

A man walks past a shop advertising job vacancies in Leicester, November 16, 2011. REUTERS/Darren Staples

A man walks past a shop advertising job vacancies in Leicester, November 16, 2011.

Credit: Reuters/Darren Staples

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LONDON (Reuters) - The government will spend up to 1 billion pounds on employment subsidies and other support to help young people into work as youth unemployment hits record levels, Deputy Prime Minister Nick Clegg said on Friday.

More than one million young people aged 16-24 are out of work in Britain, official data showed last week, with companies holding back from hiring as the economy threatens to tip back into recession after barely growing over the past 12 months.

High levels of youth employment have been blamed in part for creating the conditions for the wave of inner-city riots and looting that erupted across England in August.

Employers will be offered six-month subsidies of 2,275 pounds for each young worker they take on, enough to cover half of Britain's minimum wage for youth employees, Clegg said.

The programme, spread over three years and starting next April, will provide 410,000 work places, including 160,000 wage subsidies and 250,000 work experience placements.

"Youth unemployment is an economic waste and a slow-burn social disaster. We can't afford to leave our young men and women on the scrap heap," Clegg said.

Employers groups who had been calling for wage subsidies welcomed the move.

"This is good news for young people ... It will encourage firms to take a gamble on a young inexperienced person and help tackle the scourge of youth unemployment," said John Cridland, head of the Confederation of British Industry.

Labour has accused the coalition government of driving up youth unemployment by sticking too rigidly to its deficit-cutting austerity programme.

But the government argues that unemployment among the young is a structural problem and has been rising since 2008 when Labour was still in power.

Officials said the 1 billion pounds of funding would come from other areas of government spending and did not represent an expansion of overall expenditure. Media reports have said the money would come from a squeeze on welfare benefits.

Ministers are under pressure to find ways to revive the economy as the euro zone crisis threatens to send it into reverse gear.

The latest jobs measures come ahead of a statement next week from Chancellor George Osborne detailing plans to stimulate growth while keeping to his tight spending plans.

(Reporting by Tim Castle; Editing by John Stonestreet)

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