Thursday 9 January 2014

Racial inequality a key factor in structural youth unemployment for some ethnic minorities

The Department of Work and Pensions was uncharacteristically sotto voce yesterday when it released figures on the labour market status of Britain’s ethnic minorities for the 20 year period up to and including September 2013. Those looking for a brief summary had instead to wade through a series of data spreadsheets in order to single out the key headlines for themselves.

My attention was drawn to the figures on youth unemployment, which has yet to be significantly affected by the emerging economic recovery. Although the vast majority (8 in 10) of the almost 1 million young unemployed people in Britain at present are white, it’s clear from an interrogation of the data that youth unemployment is disproportionately affecting at least some of Britain’s ethnic minorities. 

The headline unemployment rate for whites aged 16-24 (19% in September 2013) is much lower than that for blacks (45%), young people of mixed race (26%), Indians (34%), Pakistani/Bangladeshis (46%) and Chinese (29%). As is well known, however, our perspective of youth unemployment is affected by the fact that so many young people participate in full-time education – which reduces the size of the active workforce and raises the measured unemployment rate – and includes young people in full-time education who are looking for work.

If instead one looks at unemployed jobseekers not in full-time education as a proportion of all young people in the 16-24 age group the adjusted ‘youth unemployment rate’ for whites is measured at 10.4% rather than 19%. Moreover, since people from different ethnic groups have different propensities to enter education or to look for work this adjustment likewise alters our view of youth unemployment rates for the other ethnic groups, in some cases markedly: 12.1% for blacks, 10.1% for young people of mixed race, 10.9% for Indians, 15.3% for Pakistani/Bangladeshis, and 5.4% for Chinese.

Unlike the headline youth unemployment rates, the adjusted rate suggests that only two ethnic minorities, blacks and Pakistani/Bangladeshis, fare much worse than whites, while young Chinese fare much better. However, some commentators object to this adjustment for a variety of reasons, notably because it excludes young inactive jobless people not in full-time education. Adding these people to young unemployed job-seekers (to obtain a figure broadly approximating to that for young people not in employment, education or training, or ‘neet’) is problematic since not all jobless people want to work or study at any given time. But while doing so shows ‘neet’ rates to be higher than adjusted unemployment rates they also offer a different perspective on ethnic minority joblessness  than that conveyed by the headline youth unemployment rate: 19.3% for whites, 19.9% for blacks, 17.7% for young people of mixed race, 19.1% for Indians, 26.9% for Pakistani/Bangladeshis and 14.2% for Chinese.  

A positive aspect of these figures is that they show relatively little change in the relative position of the various ethnic groups since before the recession in 2008. But the persistence of an ‘unemployment gap’ between black, Pakistani/Bangladeshi and white youths on all these various measures suggests that there is a larger structural element to the problem of youth unemployment for some ethnic minorities that won’t be solved by a stronger economic recovery alone.

It remains my view that around half the current total level of youth unemployment is due to weak demand for labour. As a result we should start to see a substantial and welcome fall this year if, as I now expect, job vacancies return to the pre-recession level. However, while urgent improvement in skills and employability is needed to reduce the remaining structural component of the problem, with ethnicity such a significant feature of youth unemployment for some groups more has to be done to tackle the racial inequality that also appears to be a key underlying causal factor. This receives too little attention in policy discussion of solutions to youth unemployment and ought to be highlighted.  

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