Sunak targets youth unemployment with £2 billion scheme

Britain's Chancellor of the Exchequer Rishi Sunak speaks during question period to the Chancellor of the Exchequer in London, Britain July 7, 2020. UK Parliament/Jessica Taylor/Handout via REUTERS

LONDON (Reuters) - British finance minister Rishi Sunak will on Wednesday announce a new scheme to stave off youth unemployment as he attempts to revitalise the economy following its COVID lockdown.

The 2 billion pound Kickstart Scheme will enable employers to hire unemployed young people aged 16-24, using government funds to pay them the national minimum wage for 25 hours a week.

“Young people bear the brunt of most economic crises, but they are at particular risk this time because they work in the sectors disproportionately hit by the pandemic,” Sunak said in a statement.

“We also know that youth unemployment has a long-term impact on jobs and wages and we don’t want to see that happen to this generation.”

The Resolution Foundation estimated the programme could help up to 300,000 young people into work.

Sunak will also announce a 111 million pound plan to boost traineeships when he delivers his update to parliament on measures to boost the economy.

Britain’s economy looks set to shrink by more than 10% this year, the International Monetary Fund predicted in June, worse than the United States and Germany, although a less severe contraction than in some other European countries.

Data last month showed the number of people on British employers’ payrolls fell by more than 600,000 in April and May as the coronavirus lockdown hit the labour market, and vacancies plunged by the most on record.

Reporting by Andy Bruce, Editing by Paul Sandle