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Pay national insurance for graduates after Covid, says ISE

Government should pick up NI bill for young to create jobs during a coronavirus recession

Staff under 24 should have their national insurance contributions covered by the government in a bid to ease graduate unemployment and stop young people being left to “languish unskilled” in a looming recession, says the Institute for Student Employers.

In its plan for reconstructing the student labour market after the Covid-19 pandemic, published 3 July, the ISE has warned there would be “huge social and economic consequences” if youth unemployment grows in the wake of the Covid-19 pandemic.

The ISE has previously said that around 14 per cent of employers admit they have withdrawn entry level job offers and around a third were pushing back start dates for new entrants.

Stephen Isherwood, chief executive of the ISE, said the labour market “is breaking down”, with a “looming youth unemployment crisis” and pressure on employers to slow or stop entry-level recruitment.

“The public purse should be used to provide opportunities for young people rather than leaving them to languish unskilled, out of work and left behind,” he added.

In its plan, the ISE called on policymakers to cut national insurance contributions of younger staff to help incentivise employers’ ability to hire graduates, as it is the biggest non-wage cost for employers. It also said a wage subsidy should be set up to help businesses cover the 20 per cent off-the-job study time for new apprentices under 24, as the apprenticeship system is “very vulnerable to recession”.

The ISE added that all young people who have been unemployed for six months or more should be given an “opportunity guarantee”, which would make sure short-term jobs are created to help people into work.

It comes after prime minister Boris Johnson promised every young person an “opportunity guarantee” last month, which he described as either an apprenticeship or an in-work placement.

The ISE said any initiatives—which could include a scheme modelled on the Peace Corps—should last at least one year, should pay at least minimum wage and should not be based on the removal of benefits.

Jane Rowley, head of graduate employment service Prospects at IT firm Jisc, backed the ISE’s proposals and said the “challenge facing young people in an uncertain jobs market as we come out of the pandemic is enormous”.

“It will take sustained and combined support from government, employers and educators to ensure that they have access to opportunities to begin their careers,” she added.