Leaders: More than money needed to lift curse of youth unemployment

OF THE many depressing features arising from the recession and its aftermath, the breathtaking rise in the level of youth unemployment is the most glaring and problematic.

The figures released today in the Scottish Trade Union Congress (STUC) labour market report are truly shocking. They show that 5,210 Scots aged between 18 and 24 have now been on benefit for more than a year, a dramatic rise from just 415 in December 2007. And there are now 43,685 young Scots claiming Jobseeker’s Allowance, easily more than double the total of 19,245 four years ago.

The figures are testimony firstly to the cumulative effects of the reductions in public sector employment as central and local government agencies wrestle with tight budgets and, secondly, to a near comatose level of confidence in the private sector.

While there have been encouraging signs of a strengthening recovery in labour hiring in the private sector as tracked by the Bank of Scotland Business Monitor, more – much more – is needed to make a significant and lasting impact on youth unemployment. Young people are our future, after all, and if we do not try to ensure they are helped through this difficult time, then our collective future is bleak.

The central problem looks as intractable as ever: how to generate an economic recovery while at the same time bearing down on UK government levels of deficit and debt that are not only unsustainable but which are also acting as an increasing drag as the annual debt interest bill rises.

Given the forecasts of a glacial rate of recovery in the immediate term, there is a strong case for greater policy emphasis on capital spending and infrastructure projects that would help a beleaguered construction industry.

But to avoid a further increase in public debt, this would need to be financed by a switch of resources from other areas of spending. Given that UK government departments outside of health, education and international development are already having to contend with sharp budget reductions, there would be deep political resistance to this course.

There are two areas where government, both at Holyrood and Westminster level, can work to make a difference and where attention needs to be even more tightly focused. The first is to create the conditions that would encourage labour hiring across the thousands of small and medium-sized firms in Scotland, which account for a large proportion of private sector employment, and for a continuing push on apprenticeships and skills training.

Here, budget provision in Scotland has already been increased, making, it is hoped, at least some difference in terms of the young. Schemes to encourage firms to take on apprentices need also to be bolstered, with labour regulation as far as possible uncluttered and made employer-friendly.

But vital though these elements are, they are not in themselves sufficient. Even the Bank of England resort to monetary easing cannot of itself trigger the release of surplus funds currently being held on the balance sheets of major companies for investment and expansion. For this to happen, business confidence needs to improve substantially. There are some signs of improvement, but it also requires a recovery in export markets.

Whatever way one looks, this is going to be a long, slow haul to lift the curse of youth unemployment. But every effort must be made. We owe it to all our citizens, but to our young people in particular.

Farcical fees can cost mis-selling victims dear

FINANCIAL services are widely held to be one of the major strengths of our economy. But it is a boast that sits oddly with recurring stories of consumer dissatisfaction and product mis-selling. Now comes a survey showing how many victims of product mis-selling are unaware of the eye-watering fees charged by claims management companies (CMCs) in seeking compensation for the original mis-selling.

The first that the public typically hears from a CMC is an unsolicited beguiling phone call telling them they may be entitled to thousands of pounds of compensation for a mis-sold product. This friendly service comes at a high price. CMCs typically charge 25 per cent of the compensation secured – plus VAT at 20 per cent. What will be particularly galling for many is that using a CMC is likely to be no more successful than claiming themselves.

Here the CMCs play on concerns over the complexity of making a claim with a bank or insurance company and navigating what can be a protracted appeals procedure. But with care and patience, this can be overcome by individuals acting on their own initiative.

CMCs may argue that they alert members of the public to a legitimate claim that they might not otherwise have made. But that does not address the issue of the high fees – and the public’s poor perception of the claim fee and its overall cost. Both these are easily avoidable by a direct application on the part of the individual. It is deeply ironic – and saddening – that the putting right of a product inappropriately sold should itself result in a loss for the individual.