Britain faces a worsening youth employment crisis, with over one million people aged 16 to 24 currently classified as not in education, employment, or training (NEET), marking the highest level in 13 years. Research from the Resolution Foundation, a left-wing think tank, recommends targeted subsidies to employers as a more effective and efficient approach to tackling this challenge than broad tax breaks.

The foundation advocates expanding existing programs such as the youth jobs grant and the jobs guarantee scheme. The youth jobs grant provides employers with £3,000 incentives to hire 18 to 24-year-olds who have been on universal credit for six months or more. The jobs guarantee offers six months of part-time employment opportunities for young people unemployed for 18 months or longer. According to the analysis, the youth jobs grant could generate approximately 2,800 jobs at a cost of about £36,700 per position, while the jobs guarantee could help 17,500 young people find work at an average cost of £38,000 per job.

In contrast, reversing recent increases in employers’ national insurance contributions for workers under 25 would create around 7,000 jobs but at a significantly higher public cost—estimated at £137,000 per job, more than triple the expense of the targeted subsidy schemes. Despite their greater efficiency, the foundation noted the current scale of these schemes is insufficient and called for a fourfold increase in the youth jobs grant to support 80,000 annual placements, alongside broadening the eligibility criteria for the jobs guarantee.

The Resolution Foundation also suggested reallocating funds from the existing apprenticeship levy, a tax on large employers intended to fund workforce training. Presently, nearly 60 percent of apprenticeships funded by the levy are for individuals aged over 24. By ring-fencing these funds specifically for under-25s, the foundation estimates an additional £1.55 billion could be made available to support approximately 145,000 new apprenticeships for young people.

Furthermore, the report questioned the recent policy of aligning the minimum wage rates for younger workers more closely with adult levels. Three years ago, the hourly rate for those aged 18 to 20 was set at 72 percent of the adult minimum wage; it has since increased to 85 percent. The foundation attributes the rise to the loss of an estimated 15,000 jobs among this demographic and recommends pausing or reassessing the convergence policy to avoid further negative impacts on youth employment.

The Resolution Foundation’s findings underscore the need for targeted fiscal measures to more effectively address youth joblessness, emphasizing support schemes tailored specifically to young workers rather than broad-based tax reductions for employers.