The Impact of the New Deal for Young People on the Labour Market: A Four-Year Assessment

Abstract

• Currently there are about 120,000 18–24 year olds participating in the New Deal for Young People (NDYP). About three-quarters of participants are male and they are much less skilled than the population as a whole.

• Evaluations of the NDYP in the first few years of the programme show that it has had a significant affect on raising the proportion of people leaving unemployment and finding jobs. The aggregate impact of the NDYP is to raise employment by about 17,000 a year. This is much smaller than the government’s claimed figure of 375,000 which refers to all participants who found jobs.

• There does not appear to be a dramatic change in the low skilled UK youth labour market. The stock of longer-term unemployed has fallen, primarily because people have entered options such as education and training rather than finding jobs. The employment to population ratio for 18–24 year old men was virtually unchanged at 61 per cent between 1993 and 2001.

• Although the net amount of jobs created by the New Deal is probably small, so are the costs. The true costs are not as high as published details suggest, as benefits would have had to be paid to NDYP participants in any case. Hence the programme seems worth continuing on cost-benefit grounds.