Wage subsidy plan for young workers brought forward

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Media captionSteph Mcgovern speaks to young engineers at Siemens engine plant

Wage subsidies for firms hiring out of work 18 to 24-year-olds are to be triggered early in 20 deprived areas.

Deputy Prime Minister Nick Clegg has announced that payments will be paid when young people have been out of work for six months instead of nine.

The initiative is part of the government's £1bn Youth Contract which was announced in November to tackle record youth unemployment.

It is hoped the cash will create around 400,000 work and training placements.

The subsidy, of £2,275, would cover six months of employment and is equivalent to half the UK's youth minimum wage paid by firms.

The number of jobless under-25s rose to 1,040,000 in the three months to April.

'Sharp divides'

Mr Clegg made the announcement at a jobs summit being held by the CBI employers' association in London.

CBI director-general John Cridland told delegates: "Youth unemployment has been rising since 2004, so it's clear that a return to growth alone will not be enough to tackle the underlying causes of the problem.

"Today's young people are entering a complex world. We ask a lot more of them in making their way in the world than was asked of previous generations.

"The result is sharp divides between the haves and have-nots, and across generational lines. As employers, we can and should step up to give all of our young people the support they deserve."

The latest figures show one in five young people available for work were still looking for jobs in the three months to April.

The unemployment rate for 18 to 24-year-olds is 19.9%, compared with a jobless rate of 5.4% for people aged 35 to 49. The average unemployment rate for people aged 16 to 64 is 8.2%.

The government's scheme will also target the regional divide in employment prospects.

According to the Office for National Statistics, jobless rates in the north-east and north-west of England, Yorkshire and Humberside, and Wales are much higher than the UK average.

Within these regions, the government has listed 17 youth unemployment "hotspots", including Blaenau Gwent, Hartlepool and Wolverhampton, where help for young people will be brought forward.

It has identified a further three hotspots in Scotland: Clackmannanshire, North Ayrshire and West Dunbartonshire.

'Sticking plaster'

The Labour Party said the initiative was "much too little and much too late".

The shadow work and pensions secretary, Liam Byrne, said: "This is a sticking plaster solution for what is now a national crisis."

Labour favours a tax on bank bonuses to finance what it calls a Real Jobs Guarantee, which would pay £4,000 per person to fund six-month work placements for young people who have been out of work for 12 months.

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