Youth Unemployment And The Spiral of Debt

The forecast for the UK economy is not looking positive, with tepid growth predicted for the forseeable future. Businesses will remain cautious when hiring new workers during this difficult  period, casting a long shadow over unemployment figures. The effects of joblessness at any age can be a source of considerable anxiety; none more so than among the younger generation.

Debt

Photo courtesy: xJason.Rogersx (Flickr)

The damage will last for a generation

Studies carried out by the Office for National Statistics show that unemployment among the young is on the rise again, with nearly 1 million young people currently out of work in the UK. Youth organisations such as the Prince Trust have expressed their concern that the recession has left a vacumn in the skillset of the younger generation. The fear is many young people will experience the recession without gaining meaningful and lasting employment.

According to the Prince’s Trust:

  • Young people not in employment are twice as likely to feel unable to cope as their peers
  • More than 1 in 4 young people believe their prospects have been permanently damaged by the recession
  • Almost 1 in 5 young people feel they have no future due to the recession.

Young people and the spiral of debt

Martina Milburn, chief executive of The Prince’s Trust, said:

“A frightening number of unemployed young people feel unable to cope – and it is particularly tough for those who don’t have a support network in place. Life can become a demoralising downward spiral – from a challenging childhood into life as a jobless adult. But, with the right support, we can help get these lives on track.”

The number of 18 to 24-year-olds out of work increased by 48,000 to 993,000.

The situation is further compounded by the rising statistics for young people to falling into debt. Analysis carried out by the Insolvency Service have warned young people to stay away from services such as payday loans. The biggest take up in debt solution services has been those aged between 25 -34.

The vulnerable economic position of the young

The correlation between rising youth unemployment figures and rising debt levels among the young is not difficult to comprehend. A lack of consistent employment leads to insufficient and irregular levels of income, leaving young people to seek inadvisable methods to make up for any perceived deficit, such as unsecured credit deals.

September – November 2012 – 957,000 unemployed 16 to 24 year olds

Unemployment

Youth unemployment statistics have stated that in the period November 2012 – January 2013 there were 993,00 young people unemployed, an increase of over 48,000 on the previous quarter.

For those aged 16-24 the unemployment rate rose by 0.9% to 21.2%. The unemployment rate  for 18-24 year olds is 19.2%. For 16-17 year olds the rate is 37.3%.

The effect of youth unemployment has wider implications, particularly in relation to debt. Many young people state that unemployment is a trigger for their debt problem and those seeking debt relief are more likely to be out of work, compared to other age groups.

Help for those who are struggling to pay off debts.

If you have run into financial difficulties and you cannot afford to pay your debts, you may be able to apply for a Debt Relief Order.

1)What is a debt relief order?

A Debt Relief Order (DRO)  is a legally binding document granted to those who cannot pay off their debts. They were initiated to help those on a low income who have relatively small amounts of unsecured debt.  The order is granted through the Insolvency Service and costs £90 to set up.

You can apply for a DRO if your assets do not exceed £300 and your debts total £15,000 or less. You will have to have been resident in the UK for the last 3 years and not had a DRO granted in the previous six months.

There are many types of debt that can be included such as payday loans, credit cards and overdrafts, hire purchase agreements and rent. However, student loans and child support cannot be included, as well as secured fines and mortgage repayments .

During the debt relief order

  1. Your creditors will not be able to take further steps against you without first applying to the courts.
  2. You will not be able to obtain credit over £500
  3. You will not be able to run a business without stating your previous involvement with a debt relief order

A New Beginning

The duration of the debt order is usually 12 months. When it has run its course you will be free of your debts and able to make a fresh start.  If you are experiencing financial difficulties and would like more information on debt relief orders, then make sure you use an authorised debt advisor.

Rosie Percy writes for a diverse range of topics and industries including education, health and finance. Rosie has written for the Guardian and other lifestyle blogs, and now lives and works in Brighton. For more information on debt consolidation click here.

Comments

  1. As an investor who travels around the world looking for investment opportunities, I’d just like to ask a question from soneone on the ground floor. Do you feel like this youth unemployment is having a big impact on the UK economy?
    Troy recently posted…5 Volatile Markets That You Might Want to “Invest” InMy Profile

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