Analysis: Retail’s role in solving youth unemployment

While some parts of Southern Europe suffer from a youth unemployment rate of more than 50%, it could be argued the UK is having a relatively easy time of it.

But while this country’s experience may not be the world’s worst, things are not going brilliantly for many young people. The number of unemployed 16 to 24 year olds reached nearly 1 million between November 2012 and January 2013, and youth unemployment has been on the rise since 2004. The figure fell from 993,000 to 950,000, or 20.2% of all young people, in February to April this year, but prospects for many young would-be workers are still bleak. The opportunities enjoyed by previous generations are simply not there in the same quantities they once were.

As the UK’s largest private sector employer - and with millions of UK workers having started their working life in some form of retail - the retail industry has a central role to play. As John Lewis personnel director Laura Whyte says: “Businesses need to realise that young people are our next generation of leaders and it is vital that we spend time giving them the opportunity to learn new skills and nurturing their talent.”

Retail workforce

Youth unemployment is a particularly relevant issue for retail - a large proportion of its workforce is under 24, and Morrisons alone says 40% of its workforce falls into this age bracket. Sainsbury’s employs 41,000 under-24s and at Waitrose 41% of workers are in the age range. The British Retail Consortium says the industry employs a total of 1 million young people, a third of the total industry workforce of 3 million.

As a result, youth unemployment has become an issue retailers are keen to try to tackle. Companies from Kingfisher to Arcadia to the grocers are ploughing resources into the problem, and not just because it’s good corporate social responsibility. Getting the right staff in at store level can mean having the right people at the top in 10 or 20 years’ time - a member of management steeped in on-the-ground knowledge of the business is a valuable resource, even if chief executives are now more likely to come from management consultancies than the shop floor.

This has led to a flurry of initiatives aimed at trying to help young people into retail roles, the latest of which is Marks & Spencer’s Make Your Mark scheme, which will create 1,400 placements for 16 to 25 year olds. The first issue, says Kingfisher chief executive Ian Cheshire, is to continue improving the image of retail among young people, so it is seen as a viable career option.

“Retail in the past has been seen as a low-skill, low-pay sector. In fact today it is an intense, exhilarating and challenging industry that requires a varied skill set,” he observes. “As retailers, we need to be working to change mindsets so that we move away from this low-skill mentality, so that we can help the next generation onto the career ladder.”

Kingfisher has been at the forefront of encouraging young people into retail, and is one of the few to give young people a taste of life at the top of the organisation instead of into entry-level jobs through its Youth Board at B&Q.

The project gave nine young people a unique opportunity to learn about the business and deliver a presentation on how B&Q could re-think its business model. The board brought “energy and perspective” to the company, Cheshire says.

Paul Dowd, head coach partner at Morrisons, maintains that many young people who find it hard to get jobs lack in confidence, and retailers can help to change that. “We think the best way to get young people into the workforce is for them to get training, a qualification and to build their confidence. We have a number of schemes in place to ensure we’re doing exactly that.”

But while it’s important to make sure retail is an enticing career option and that young people are aware of the opportunities, the problem is there are often just not enough jobs to go around. And the hardest to reach young people are often those who are not engaged at all with the job market - they are the people retailers will need to work hard to get, and without a commercial incentive to do so.

As Dowd says: “Recruiting colleagues is not difficult, we have thousands of applicants when we open a store.

However, we want to give opportunities to young people who may need some help to get on a level playing field with those already in the job market. For us, it’s worth the investment.”

Youth programmes

Tesco is attempting to reach out to such people with a couple of schemes, after Philip Clarke highlighted youth unemployment as one of the business’ three key social priorities.

Its school outreach programme involves Tesco leaders visiting schools to give advice on the kind of skills needed for business, from retail to farming and manufacturing. The idea is to increase the connection between education and business.

“Too often, many young people find they are turned down because they don’t have the right experience - but they can’t get experience until they have a job,” says Michael Kissman, director of community and property communications at Tesco. “We want to help break the cycle. We recognise that young people cannot do this on their own. They need businesses to step up and give them an initial opportunity.”

Tesco’s other big scheme, Regenerative Partnership stores, is designed to ensure a “significant proportion” of jobs go to the long-term unemployed. In addition, this year the retailer will be reserving 500 jobs for long-term unemployed young people in its UK stores. “We have learned that the secret of success is not to recruit on the basis of qualifications and experience alone but to factor in attitude and commitment, and to be ready to give people a chance when they need it,” Kissman says.

Morrisons and Sainsbury’s both take part in the Feeding Britain’s Future scheme every September, created to give young unemployed people the opportunity to experience working in the food industry. Morrison’s contribution this year will be a three-day programme in 450 stores for 1,300 young people - last year, the event resulted in the grocer giving jobs to 96 young unemployed people.

Its other scheme, Our Club, aims to employ the techniques used in sports coaching to help build skills and confidence. The six-week programme has so far managed to place 60% of attendees in work.

The apprenticeships

Meanwhile, John Lewis’ apprenticeship scheme has grown by 25% this year, with 100 spaces now open to new recruits. Apprenticeships are growing in popularity among retailers - Phones4U and Morrisons both offer them, and 200 new apprentices will start at Waitrose in the next year. Waitrose also works with the Prince’s Trust, though its Get Into programme, which offers placements to 16 to 25 year olds who may have struggled at school, been in care, are long-term unemployed or have been in trouble with the law.

Multi-pronged approach

These schemes might not solve the overall problem, but they certainly help.

Cheshire says the answer to youth unemployment needs to be multi-pronged. “My feeling is there won’t be one magic bullet,” he says.

“We’re pleased about the lower income tax threshold, because anything that gets people into work is positive, and we’ve said before that National Insurance holidays could help some employers to start recruiting again where there has been a freeze.”

Michelle Irving, employment policy advisor at the British Retail Consortium, says the BRC has lobbied the Government on a time-limited National Insurance holiday for new recruits, and talked about Government funding for more training and apprenticeships.

Whyte agrees it’s a complex problem, especially given the severity of the last recession. “While large recruitment strategies would be good in terms of getting people into jobs, for many businesses this is just not possible with the ongoing uncertainty of the economic climate,” she says.

The problem about the current youth unemployment figure is that it can’t be wholly blamed on the recession. While that undoubtedly made conditions worse, unemployment among young people actually started to rise in 2004. There are other forces at work - whether it’s the increase in immigration leading to fewer low-skilled jobs being available for young workers, or whether the quality of education for young people who are likely to end up unemployed has fallen, something is amiss.

Talent troubles

It’s not clear what has made this round of youth joblessness so protracted - young people have always been more affected than most by recessionary troubles, but this time things seem more fundamental, and although it’s heartening to see the numbers starting to improve slightly it’s clear the issue is not going anywhere fast.

The problem should be a pertinent one for retailers, as it affects their potential pool of talent. And the long-term effects of continued youth unemployment are persistent - a large number of people without much training and experience will have a dampening effect on the whole economy for years.

Working closely with schools and colleges, lobbying the Government where necessary and working on individual schemes will all help. With so much at stake for both young people and businesses, it’s an issue that needs to remain at the top of the agenda.