Businesses will be incentivised to take on unemployed 16-17 year olds under a new scheme announced today by deputy prime minister Nick Clegg.

The £126 million scheme is aimed at improving the work chances of ‘Neets’ – young people who are not in employment, education or training – and is particularly targeted at under-18s who have left school without any GCSEs at C level or above. Employers will be able to apply for contracts worth £2,200 for each such individual they take on, with an initial up-front payment followed by more money if they employ the young person for 12 months.

The incentives – part of the government’s Youth Contract, would help deal with the “ticking time bomb” of youth unemployment, said Clegg.

"Sitting at home with nothing to do when you're so young can knock the stuffing out of you for years. It is a tragedy for the young people involved - a ticking time bomb for the economy and our society as a whole. This problem isn't new, but in the current economic climate we urgently need to step up efforts to ensure some of our most troubled teenagers have the skills, confidence and opportunities to succeed."
The last set of official job market statistics showed that more than a million 16 to 24-year-olds (1,163,000) - almost one in five – fit into the ‘Neet’ category.

The incentive scheme comes on top of a similar programme announced last week for 18-24 year olds hired from the Work Programme.

CIPD welcomed the latest announcement.

Katerina Rüdiger, skills policy adviser at the CIPD, said: “We welcome today’s announcement of a scheme specifically targeted at the most difficult-to-reach groups with the poorest qualifications.

“Well before the recession hit, the CIPD was finding a marked preference amongst employers to recruit people with more experience, even to entry level jobs – to the detriment of young school leavers. However, we’ve also seen, through initiatives we’re running to give young people access to voluntary guidance and mentoring from our members, that young people can quickly have their confidence and ability to impress employers boosted sufficiently to find work. We also know that employers who do hire young school leavers have far more positive views of the potential of younger employees than those who do not.

“If we can break the cycle of no experience, no job, there is a real opportunity to boost employer perceptions of young people, and spare the economy the negative consequences of a significant minority of young people who grow up with little experience of work.”

Recent research has shown that employer contact with under-18s, through school visits and work experience, is crucial for improving the employment chances of young people.