Opportunities improve for young UK workers, but automation threatens

  • The UK’s percentage of NEETs (young people not in education, employment or training) has improved relative to other OECD nations but 20% of NI young people are NEET
  • Over next 15 years, up to 28% of UK young workers’ jobs could be at risk from automation
  • Technology will create new jobs, but training young people to move flexibly between careers as will be critical
  • 44% of jobs in wholesale and retail face potential risk of automation, while only 5% of STEM jobs are threatened

 

The UK could boost GDP by £43 billion if it could cut the number of young people not in education, employment or training (NEET) to German levels, according to estimates in PwC’s latest Young Workers Index.

PwC’s Young Workers Index says that if the UK - where 13.7% of all 18-24 year-olds are NEET - could match Germany’s 9.3% NEET level that would be equivalent to a GDP increase of around £7,500 per 18-24 year old.

Overall, the UK’s percentage of NEETs has improved relative to other OECD countries, falling to 18th place out of 35, the lowest level since the Young Workers Index began in 2006. This has largely been a result of falling unemployment since the financial crisis and the emergence of new job opportunities.

In Northern Ireland, where NEETs account for around one-in-five (20.9%) of young people and where the region percentage of NEETs is the highest in the UK, matching even the UK average would deliver a multi-million economic boost.

Northern Ireland’s NEET level is also well above the EU (15.8%) and the Republic of Ireland (18.5%), while some English regions, like the South of England (12%), the South East, South West and East of England and London (13%) are also much lower.

 

Commenting on the importance of developing strategies to get NEETs into the workforce, PwC Northern Ireland partner, Dr David Armstrong said:

 

“It’s encouraging that the UK has improved young people’s job prospects significantly in recent years, but the levels of young people not in education, employment or training in Northern Ireland remain stubbornly high relative to top international performers like Germany where there are effective vocational education systems.

 

“If Northern Ireland is to ensure regional prosperity in a post-Brexit world, more has to be done to ensure we close the gap with Ireland, the UK and with our European competitors in places like Switzerland and Germany”

 

PwC’s research in the Young Workers Index also found that, by the early 2030s, up to 28% of the existing jobs of young UK workers aged 16-24 could be at risk from automation, with those workers with low educational attainment most at risk.

PwC says that new Artificial Intelligence (AI)-related technologies will also create many new employment opportunities, however the UK could still see 30%of existing jobs facing automation over the next 15 years. Consequently, ensuring that young workers have the appropriate education and training to take on these new jobs will be crucial to maximising the UK’s long terms economic potential.

Across larger OECD countries the estimated percentage of existing jobs at risk of automation for younger workers aged 16-24 ranges from around 24% of jobs at risk of automation for young workers in Japan, compared to 38% in Germany and 39% in the US.

Currently, nearly a quarter of UK 16-24 year olds (24%) are employed in the wholesale and retail sector where PwC puts the potential risk of automation in the sector as high as 44%. Workers in this sector also tend to have lower educational attainment and qualifications, potentially limiting their ability to move flexibly between industries and into new jobs in response to automation. Transport and manufacturing are other sectors facing high risks of automation, particularly for male workers with lower education levels.

In contrast, PwC analysis found that only around 5% of young people are employed in industries demanding science, technology, engineering and mathematics (STEM) skills, which could be long term beneficiaries of new digital technologies such as AI and robotics.

 

John Hawksworth, PwC chief economist commented:

 

“Empowering young workers to succeed in an increasingly automated world will be crucial to the long-term success of the UK economy.

 

“For the UK to prosper we need to invest in creating a vibrant Tech sector right across the country and develop more people with the skills needed to help businesses transform.

 

“The demand for technology skills is rapidly increasing, while the pool of available Tech talent is shrinking. We need to open up these careers to a wide range of students, offering a clear pathway to meet the skills demands of the future.”

 

Looking at data for a number of OECD countries including the UK, PwC found education levels are a large factor in determining who is most susceptible to the rise of automation.

Some 50% of male young workers with educational attainment of GCSE-equivalent or lower, are at greatest risk of automation, compared to just 10% of men with university degrees.

Women are on average, believed to be less susceptible to automation, with around 30% of those with GCSE equivalent or lower most at risk compared to 9% of women with university degrees. This reflects higher female employment in sectors like health and social care that are relatively harder to automate.

Ends.

 

Notes to editors.

About the PwC Young Workers Index

1. This is a weighted average of eight indicators, including NEET rates, youth employment and unemployment rates, incidence of long-term unemployment, school drop-out rates and educational participation rates. The age range covered is generally between 15 and 24, but varies as appropriate by indicator.

2. These indicators are normalised, weighted and aggregated to generate index scores for each country. The index scores are rescaled to values between 0 and 100, with the average value across all 34 OECD countries set, by definition, to 50 in 2006. Index scores were also calculated for 2011, 2014, 2015 and 2016 (or the closest years for which internationally comparable data were available).

3. Further details of the methodology, including the calculation of potential long-term boosts to GDP from lower NEET rates, is contained in the full report.

4. The estimated risks of automation are based on additional research using the methodology described in our March 2017 UK Economic Outlook report here: https://www.pwc.co.uk/economic-services/ukeo/pwcukeo-section-4-automation-march-2017-v2.pdf

A copy of the PwC Young Workers Index is available to download below.

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