Labour’s jobless shambles: Starmer and Reeves are pricing the younger out of labor – and pushing companies to switch them with AI, warns MAGGIE PAGANO

Keir Starmer’s promise that he would ‘fix the foundations’ of the country is in ruins.

This is what the Prime Minister said in that famously depressing Rose Garden speech in August 2024: ‘I promised that we would get a grip on the problems we face, that we would be judged by our actions, not by our words. 

I said before the election – and I say it again really clearly today: growth, and frankly by that I mean wealth creation, is the number one priority of this government.’

That didn’t last long. Since Labour came to power, the economy has flat-lined at best, GDP per capita is down, the country’s wealthiest and smartest are leaving in droves, the welfare bill is rocketing and business investment is depressed.

At the same time, consumer confidence is on the floor while household debts are rising at their fastest pace in seven months, triggered by an increase in borrowing among the young.

And now comes the most shocking news of all – unemployment has risen every single month since Labour took charge, with more than 700,000 redundancies in that time. 

Jobs crisis: Unemployment is now at its highest level for five years, at 5.2% and among those aged between 16 and 24 it has shot up to 16.1%

Unemployment is now at its highest level for five years, at 5.2 per cent – and the highest non-Covid level since 2015. 

Yet more devastating is the explosion in the number of those just starting out in their careers – those aged between 16 and 24 – who are unemployed.

It has shot up to 16.1 per cent, the highest for more than a decade. For those aged 25 to 34 – a time in their lives when they should be climbing high – the rate is 4.7 per cent, the highest for a decade.

Until recently, one of Britain’s greatest strengths had been the flexibility and resilience of our labour market, mainly because of Margaret Thatcher’s reforms of the 1980s.

Not anymore. Our youth unemployment rate is above the European Union’s for the first time since records began in 2000. 

Those not in education, employment or training – the NEETs – number 946,000, with roughly 729,000 officially unemployed. 

This is a national tragedy, one which all political parties – and business leaders – should make their top priority.

As the Tories quite rightly warned, we are breeding a new ‘jobless generation’, one in which the young either can’t find jobs or have discovered that not working can pay as well by signing on to benefits.

First jobs are a rite of passage for most of us, part of the ritual of growing up, of finding out what sort of job or career you want. 

Indeed, stapling together boxes on an assembly line (one of my worst holiday jobs) or digging trenches are not only the stuff of memories, but it’s these experiences which show us what we don’t want to do.

Most young people do want to work, but they need a stirrup to help them climb the ladder and encouragement.

Yet the danger is that Labour is pricing the young out of jobs, part-time and full-time, making it even more economical for companies to adopt AI or robotics to do the job instead.

As always, governments are to blame. It was the Tories who started increasing the National Living Wage, a policy continued by Labour.

Catherine Mann, one of the Bank of England’s Monetary Policy Committee members, puts the blame squarely on the wage increases together with the National Insurance rises as the biggest driver behind the high youth jobless rate.

None of this should come as any surprise – every action has a reaction.

If you jack up business taxes, impose ruinous Net Zero policies giving us the most expensive energy in the West, whack small business owners with higher rates and taxes, sting the middle classes and the wealthy with higher personal taxes, then companies will stop hiring and households will retreat.

Starmer has only himself and his misguided Chancellor, Rachel Reeves, to blame for this depressing outlook.

Compounding their problems, the combination of stagnant growth, slowing wage growth and rising unemployment doesn’t help them either, because it can only lead to lower tax revenues.

With the Employment Rights Act in the offing, and the impact of recent tax rises still to come through, it can only get worse. The PM will need more than one of his much-practised U-turns to fix the rubble – more of a somersault.