We should be ashamed of youth unemployment in the UK

Britain's youth unemployment rate is a shameful 21%. And there are many more 'semi-hidden' unemployed. We owe it to them to create proper jobs.

Mostly we tend to think of entrepreneurs as a good thing. They drive growth, innovate, employ people and move us all forward. But is a forced entrepreneur as good as a voluntary entrepreneur?

A press release just out from peopleperhour.com is pleased to announce that a huge number of young people are setting up their own businesses and so have signed up to the site (freelancers use it to sell their time by the hour). 89% more are signed up this year than last year. Good news indeed, you might think. You'd be wrong. Why?

Two reasons. First because "most" of the new freelancers "admit that the tough jobs market" has forced them into it. In this week's Moneyweek magazine I interview Luke Johnson. (If you're not already a subscriber, subscribe to MoneyWeek magazine.)

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We run through the characteristics common to successful entrepreneurs. They include being optimistic, persistent, maverick and the like. They don't usually include being desperate (although if you have the other characteristics it might help).

The fact that you can't get a job and so are forced to hawk what skills you do have around on the internet doesn't make you an innovative wealth creator. More often than not I would guess it makes you one of the semi-hidden unemployed.

The second problem is this: peopleperhour describes the people who sign up to its site as "freelance consultants". And if there is anything we really don't need too many more of it is these.

Run your eye down the list of services on offer and you will see that they are all actual services accounting and legal stuff; web design stuff; fundraising and sales stuff; and an awful lot of marketing. That's all fine. But it isn't enough. A dependence on the circularity that is the services sector is part of what got us into the trouble we are in now.

We should of course be pleased that our young are having a go at making a living but, much more that, we should be ashamed of the fact that, in part thanks to their lousy educations (one of the miserable unemployed youths highlighted in the Times today had a degree in music and media management for god's sake) and to our employment-inhibiting regulatory environment, this is how they have to do it.

Johnson wrote a piece in the FT yesterday calling for a bonfire of red tape and a tax holiday for fast-growing start ups. If we want get our youth out of the dead end that is freelance consultancy and into proper jobs we are going have to do that and more.

Why just start ups? Maybe we owe it to the youth we have so let down with our idiotic credit bubble and bust; our failed education policies; and our woefully ill-balanced economy to introduce some kind of special treatment for all fast-growing employers whenever they were founded.

That might, as Johnson says, not seem particularly fair to the plodders in the corporate world. But having youth unemployment at 21% isn't exactly fair either.

Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.