PwC comments on the latest UK NEET rates among young people

Paige Tao, Economist at PwC UK, comments on the latest government statistics on NEET (not in education, employment or training) rates in England:  

“The NEET rate is an important indicator to focus on as it relates to young people who are indefinitely inactive in the labour market, rather than being temporarily out of work due to cyclical forces. The NEET rate among 16 to 18 year olds, which had been on the rise since 2016, fell slightly on an annual basis to 8.0% in 2023. This is still above the pre-pandemic (2010-2019) average NEET rate of 7.6%.

“Deliberate efforts from the government to transition this group into work can help strengthen their contribution to the economy. For instance, the Netherlands has had success through initiatives targeting early school leavers that do not have a basic qualification through connecting them to suitable education and employment opportunities.

“Our 2024 Youth Employment Index report reveals the challenges the UK is facing. It has a middling performance when it comes to the NEET rate among young people, ranking 18th out of 38 OECD countries. Our analysis shows that sickness-related inactivity among 16 to 24 year olds is on the rise, almost one third higher in the second quarter of 2023 compared to the pre-pandemic second quarter of 2019. We found mental health challenges are currently having a significant impact on young people’s career choices and well-being at work.

“Employers have a clear role to play in supporting young people. For instance, our findings reveal that just one-third of young people believe employees provide the right support for their mental wellbeing at work, suggesting there is more to be done.”

Notes to Editors

Our Youth Employment Index, co-produced with Connectr and released earlier this year, highlighted the UK’s performance among other OECD countries. Topline takeaways included:

• The UK’s youth employment performance remains relatively steady, ranking 22nd out of the 38 OECD economies

• Improving youth employment outcomes and reducing the NEET (not in education, employment or training) rate in all UK regions to match the level of the South West could boost the UK economy by around £23bn per year 

• The Netherlands, Switzerland and Iceland are the best performing countries on the Index

• Australia, South Korea and France saw the largest improvement over the last five years while Poland, Sweden and Estonia saw the greatest fall

Our latest July 2024 edition of the UK Economic Outlook explored the drivers of why young workers may fall into NEET status as we surveyed 1,000 UK adults. The takeaways from this are below:

• A surge in mental health conditions appears to be one of the drivers for higher labour market inactivity among young people, with nearly a quarter (22%) of 18 to 24 year olds suffering from a long-term mental health condition, much greater than 8% UK-average

• Two in five (45%) inactive young people would be more likely to return to work if future employers provided mental wellbeing support and one in five say it prevents them pursuing their preferred career. 

• One in five people (22%) in the UK of working age are neither employed nor actively seeking a job, up to 770,000 since the beginning of the pandemic, of which young people account for nearly a third of rising inactivity levels.

PwC UK was also involved in the recent Pathways to Work Commission report, which includes the biggest single in-depth study of long-term worklessness and makes practical recommendations to address economic inactivity. Barnsley - a market town in South Yorkshire - where residents are 12% more likely to be economically inactive than the national average was the main focus of the report. Throughout the Spring of 2024, Barnsley Council and South Yorkshire Combined Authority worked with PwC to explore how they could support 2,200 economically inactive people into sustained employment by 2028. If successful, the financial return on a total investment of £10.8m will be £39.7m per year (through improved wellbeing and income from employment) plus £28.8m per year (through reduced costs to the public purse).