Government’s Youth Employment Scheme Could Address Hospitality Staffing Challenges

Chancellor Rachel Reeves has announced plans for a mandatory work placement scheme targeting young people who have been unemployed for 18 months, a move that could provide the hospitality sector with access to a new pool of potential workers.

Speaking at Labour’s annual conference in Liverpool, Reeves pledged to deliver “nothing less than the abolition of long-term youth unemployment” through the initiative, which will require young Universal Credit claimants to accept guaranteed paid work placements or face benefit sanctions.

The scheme expands upon the youth guarantee announced last November, which promised 18 to 21-year-olds in England access to apprenticeships, training, education or employment support.

Under the new proposals, any young person claiming Universal Credit for 18 months without being in work or education will be offered a guaranteed paid placement designed to develop employable skills. Those refusing without reasonable grounds could lose their benefits.

The chancellor framed the policy around building a society based on “contribution”, emphasising that work placements would equip participants with the capabilities needed to secure permanent employment.

Current government figures show approximately 948,000 people aged 16 to 24 – roughly one in eight young adults – are not in education, employment or training.

The announcement comes as the hospitality and licensed trade sectors continue to grapple with persistent recruitment difficulties. Many operators have reported ongoing challenges in filling both front-of-house and back-of-house positions since the pandemic.

The scheme could offer hospitality businesses structured access to young workers seeking to build workplace skills and experience. Paid placements in pubs, restaurants, hotels and other venues could provide participants with customer service capabilities, team working experience and operational knowledge highly valued across the sector.

However, questions remain about implementation details, including how placements will be allocated between sectors, what level of remuneration will be required, and what support will be available to employers taking on participants who may have limited work experience.

The hospitality industry has traditionally served as an entry point to the workforce for young people, with many senior industry figures having begun their careers in junior roles. Industry bodies may view the scheme as an opportunity to engage with potential long-term employees while addressing immediate staffing needs.

Policy Chair of the Federation of Small Businesses (FSB), Tina McKenzie, said:
“This is a hugely important announcement – offering thousands of young people a crucial chance in life.

“Reprioritising spending from employment programmes which aren’t working to this type of scheme is exactly the way to get much-needed bang for taxpayer cash. This was a key plank of FSB’s submissions on spending plans for the Department of Work and Pensions earlier this year.

“It is a welcome commitment that – done right – will help small businesses do what they do best, provide jobs in our local communities, and help those who need it most get into work.

“Key to getting the details right is making sure there is a backstop offer to those who are now over-25, particularly those with health challenges; that young people out of work for health reasons are not excluded through misguided double funding rules; and that small businesses are enabled to play a full role in the delivery of the scheme.

“We look forward to working with the Treasury to get the important details of this announcement right, and we hope it heralds a pro-jobs, pro-self-employment, pro-business, pro-growth Budget in two months’ time.”