Impact assessment: Equality analysis for the Kickstart Scheme

The #Kickstart scheme is specifically targeted at 16 to 24s starting with those on Universal Credit (UC), but without prejudice for those of that age not in employment or on UC. Evidence suggests that entering the labour market in a weak economy can lead to earnings and employment scarring, and for the younger generation could pose the threat of permanent damage to the economic and individual welfare.

Kickstart is designed to alleviate some of these issues.

According to the latest official labour market statistics (August to October 2020), 596,000 16 to 24 year olds are unemployed, of which 344,000 are not in full-time education.

This equates to around 35% of the total unemployed population (1.69 million). The unemployed rate for 16 to 24 year olds is also higher than the average rate (8.3% non-FTE versus 4.9% on average).

Even before the current economic situation, there was an employment gap for young people of nearly 24 percentage points (pp) compared with the rest of the working age population.

There is evidence that the current situation will have exacerbated this age inequality:

• In the Institute for Fiscal Studies’ briefing note ‘Sector shutdowns during the coronavirus crisis: which workers are most exposed?’ – shows the share of employees in shut-down sectors, by gender and age. It shows that young people are likely to have been disproportionately affected by sector shutdowns because of COVID-19. On the eve of the crisis, employees aged under 25 were about two and a half times as likely to work in a sector that is now shut down as other employees.
  
• Sectors that are shut down as a result of social distancing measures employed nearly a third (30%) of all employees under the age of 25 (25% of young men and 36% of young women). This compares to just 1 in 8 (13% of) workers aged 25 and over.
  
• At the start of the pandemic claims to UC were disproportionately from older workers. However, that trend has now reversed. Latest UC data suggests that over ¼ of all new UC claims are from people aged 16 to 24, up from around 20% in the same period last year
• Low earners are 7 times as likely as high earners to have worked in a sector that is now shut down. 2019 ONS earnings data (ASHE) suggests there is a correlation between age and this earnings distribution, with young people being – on average – lower paid than older counterparts

One mitigating factor is that the majority of the affected younger workers and lower earners live with parents or others whose earnings are likely to be less affected, so many may suffer smaller hits to their living standards than otherwise. This, however, does not diminish sizeable employment inequality that younger people face already compared with the wider population, justifying the focus on this group.

Workers aged 65+ are also more likely to work in shutdown sectors than the middle aged. However, there is no evidence that these workers face scarring in the same way those leaving education do at a time of recession, and these workers also have access to other income sources, such as State Pension.

There is also evidence that young people are disproportionately less likely to be able to work from home. This means that they have been faced with the prospect of having to go to work – which for some, will not have been possible – or they are more likely to have been furloughed or made redundant as a result.

This analysis enables ministers to fulfil the requirements placed on them by the Public Sector Equality Duty as set out in section 149 of the Equality Act 2010.