Government offers wage incentive to businesses hiring jobless youths

Nick Clegg, Liberal Democrat leader

Businesses offering work placements to unemployed teenagers will receive wage subsidies in the government’s latest effort to combat rising youth unemployment. 

From April next year, the £1bn Youth Contract scheme will provide a subsidy worth £2,275 to any business owner taking on an unemployed 16-24 year-old for six months. 

The fund will be spent over three years and provide work placements, job subsidies and apprenticeships to 500,000 unemployed teenagers, deputy prime minister Nick Clegg said today.

Clegg told the BBC’s Radio 4's Today programme employers had told him: “If you give us a bit of help at the beginning, with the start-up costs of employing a young person, invariably we stand a good chance of giving that young person a permanent job.”

Critics of the scheme have questioned how the £1bn funding will be raised. Labour’s work and pensions secretary Liam Byrne claimed it will be provided by freezing the tax credits of working families. The Telegraph compared it to the Thatcherite Youth Training Scheme (YTS) of the 1980s and stated that like YTS, it is likely to be criticised for allowing firms to benefit from cheap labour for unskilled jobs.

Rajeeb Dey, CEO of Enternships, welcomed the launch: “We need to give young people a number of ways to build their skills and experience and prove to employers that they are indispensable. There are over four million small businesses in the UK and we need to send a rallying call across the country that now is the time to give young people a chance to work.”

Dr Adam Marshall from the British Chambers of Commerce (BCC) said the government has to make it easier for businesses to hire young people and paying employers half of the minimum wage payment for the first six months will help businesses offset this cost.

Clegg's announcement of the scheme follows news that the number of NEETS has risen by 12% over the past year to 1.163 million. 

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