Over a third of employers would hire more young people if they were offered tax credits, fresh research has found, amid reports the government is drawing up a plan to subsidise employment for under 24-year-olds.
Research by the Recruitment and Employment Confederation (REC) showed some 36 per cent of employers claiming they would offer role to more young people who are not in employment, education or training (Neets) if they were given financial incentives.
Just under a third (29 per cent) of respondents said hiring would increase if there was sustained funding for training and employment programmes.
The survey of some 233 employers pointed to a relative openness for firms to help tackle youth worklessness, a problem which both Keir Starmer and Rachel Reeves have vowed to focus on in policymaking.
Financial support plans could be considered by the next Budget as the i Paper reported on Monday that the offering of tax incentives for employers hiring under 21s could be expanded to under 24s.
The government believes that getting more young people off benefits would cost less in tax breaks than in welfare payments, with a national insurance relief already allowing employers to hire young adults on salaries under £50,000.
Kate Shoesmith, deputy chief executive at REC, said the government should look to reduce labour costs when devising any scheme to improve hiring levels in the UK economy.
“Employers want more action from the government on the Growth and Skills Levy,” Shoesmith said.
“It has to be flexible enough to deliver for the people who most need support.”
Shoesmith also called on the government to put “pragmatism” into the Employment Rights Bill to ease an expected slowdown in hiring.
Reeves plots incentives for employers
At the Labour Party conference, Reeves unveiled a guaranteed work placement scheme for 18 to 21-year-olds out of work for 18 months.
The scheme, which will be funded through existing departmental budgets, has been praised by business lobby groups but industry is still waiting for further action on how the government plans to get more inactive people into the national workforce.
Earlier this year, Reeves labelled trends in the number of young Neets a “crisis” while Starmer has said the welfare system was “broken” for young people.
“None of us should accept a system that operates like that. It is broken and needs to be mended,” Starmer told the Liaison Committee in July.
“All the evidence is that if you are on benefits and out of work at that young age, the likelihood of ever getting into good, well-paid, secure employment goes down for the rest of your life.”
The Office for National Statistics (ONS) showed there were 948,000 Neets between the ages of 16 and 2024 in June.