Starmer just received an unwelcome reality check to his economic growth plans
PA
While the unemployment rate in the UK unexpectedly fell from 4.2 per cent to 4.1 per cent in the three months to July, one age group continues to struggle to enter the workforce.
According to the Office for National Statistics (ONS), youth unemployment has risen to a post-pandemic high, threatening to derail Starmer's economic growth plans.
Unemployment among those aged between 18 and 24 hit 13.3 per cent, the highest rate since early 2021 when lockdown was damaging the economy. The rate for 16-24-year-olds was even higher, at 14.2 per cent.
There were 597,000 young people out of work in May to July 2024, an increase of 51,000 from the previous year.
The UK unemployment rate fell from 4.2 per cent to 4.1 per cent in the three months to July
PA
The high share should not be a grave concern as a large proportion of under-25s are students or still in school.
However, the proportion of young people classed as economically inactive, neither in paid work nor looking for work, has increased from below 30 per cent before the pandemic and has taken place amid a rise in long-term sickness across the nation.
Young people struggle to find work in an increasingly competitive job market leading many university graduates to work for minimum wage.
Figures from the ONS also show a trend in employers hiring older workers in recent years.
Between August 2023 and August 2024, there was a decrease of 127,000 payrolled employees aged under 25.
But during the same period, payrolled employees aged 35 to 49 increased by 114,000.
Difficulties getting young people into work represents a threat to the Government's plans to supercharge growth and repair public finances.
Starmer wants Britain to have the strongest economic growth in the G7.
However, the Government will struggle to reach its targets if a significant proportion of the population is out of work and not able to find jobs.
Youth unemployment will also damage Chancellor Rachel Reeves' plans to get public finances back in line.
This is because when more people are out of work, fewer people are paying taxes and more are claiming benefits and putting pressure on the public purse.
Neil Carberry, the chief executive of the Recruitment and Employment Confederation, warned how unemployment at the start of a person's working life is dangerous and can make it difficult for workers in the future.
He said: "The evidence is really clear. A period of unemployment in youth really scars people’s incomes over the following 20 years."
Carberry also noted that the number of job vacancies has been falling for some time and “when the labour market is weakening, it tends to be early-career workers who see the biggest effects”.
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Overall the number of vacancies has fallen by 143,000 over the last year to 857,000, which is the lowest number since lockdown and almost back to pre-pandemic levels.
To make matters worse, the Labour Government's plans to improve worker's rights are putting off bosses from hiring.
Angela Rayner, the Deputy Prime Minister, announced a range of plans from the right to ignore work emails outside working hours, greater power to demand flexible working and benefits like sick pay from day one.
But a survey from the Institute of Directors (IoD) found 57 per cent of bosses are less likely to hire workers as a result of these plans.