SJL Insurance CEO Simon Lancaster discusses the challenges young people face when entering the workplace, why rising employment costs can discourage businesses from hiring inexperienced workers and what more the Government could do to support employers.
Some of Britain’s biggest retailers are offering 11,000 work experience placements for young people as part of a Government drive to tackle youth unemployment.
The initiative will provide placements for 18 to 24-year-olds receiving Universal Credit, helping young people gain the workplace experience that can be essential when applying for permanent roles.
Speaking to LBC News, Simon Lancaster, CEO of SJL Insurance, welcomed the initiative but argued that more needs to be done to address one of the fundamental problems facing employers: the cost of taking a chance on someone with little or no previous experience.
Why Young People Are Finding It Harder to Gain Experience
Simon believes traditional routes into employment, such as Saturday jobs, work experience and apprenticeships, can play an important role in helping young people develop workplace skills.
He followed the apprenticeship route himself and described how starting at the bottom of an insurance brokerage gave him an opportunity to learn the industry before eventually progressing to manage the branch.
However, Simon believes the economics of employing inexperienced workers have changed.
While supporting the principle of the minimum wage, he argues that when the cost of employing a young person with little experience becomes comparable to employing an older candidate with several years of experience, businesses may naturally choose the more experienced applicant.
That creates a difficult cycle for young people: they need experience to secure a job, but they need someone to give them a job to gain that experience.
More Support Could Encourage Businesses to Hire
Simon believes financial incentives could help employers take on more young people without reducing the wages those employees receive.
Rather than removing minimum wage protections, he suggests the Government could provide businesses with greater financial assistance when they recruit and train younger workers.
This could include stronger apprenticeship incentives or support with employment-related costs such as National Insurance.
Simon welcomed the Government’s latest work experience initiative as a positive start, but believes further measures are needed to make employing and training young people more attractive to businesses.
Apprenticeships Can Create Long-Term Employees
SJL Insurance’s own experience demonstrates the potential long-term benefits of investing in younger employees.
Simon says the business has employed more than 30 apprentices, with many remaining at the company for years and progressing into team leader positions.
For employers, bringing someone into the business early in their career provides an opportunity to develop their skills, introduce them to the industry and potentially create loyal, experienced employees for the future.
Businesses Also Have a Role to Play
Simon also stressed that tackling youth unemployment cannot be left entirely to the Government.
Businesses themselves need to find innovative ways to give people opportunities and develop new talent.
At SJL Insurance, this includes an academy that recruits people from outside the insurance industry, including those working in sectors such as retail and hospitality. Groups of new recruits are trained together in a classroom-style environment to give them the knowledge needed to begin careers in insurance.
For Simon, the solution therefore requires action from both sides: Government support that makes employing inexperienced people more affordable and businesses willing to create new ways for people to learn, develop and build careers.
Full Interview Transcript
Interviewer: Some of Britain’s biggest retailers are offering 11,000 work experience placements for young people. This is all part of a major drive by the Government to cut youth unemployment.
The initiative will see 18 to 24-year-olds on Universal Credit given placements at major businesses.
Let’s speak live now to Simon Lancaster. He’s an insurance industry business owner and employer.
Simon, thank you for taking the time to speak to us here on LBC News this evening. Just give us more of an understanding of the overall picture here. Many young people often had weekend jobs. I know that I did when I was younger. I also worked through university and during the summer holidays, and that was the norm for a lot of people I knew.
But the harsh reality for a lot of young people now is that these jobs aren’t even available.
Simon: Yeah, absolutely. Thanks for having me on.
Ever since Alan Milburn published his report earlier in the year, there’s been a lot of news focus on this. But in business, we’ve seen it for a couple of years, really.
Young people, like you say, used to have work experience and Saturday jobs, and then they could get apprenticeships. I did an apprenticeship rather than going down the university route.
They’re all great ways to get that important work experience in your younger years that you can then take into later years.
The problem we’ve had as businesses trying to employ young people, and a lot of businesses want to employ young people partly to give back but also because it’s good to bring young people in and train them up, is that they’ve all been caught up in the minimum wage.
That’s great in principle, and even apprenticeships have been caught up in it, but it does make them as expensive to employers as older, more experienced people.
So, we find businesses turn to the older, more experienced people just from a cost point of view.
Hopefully this, along with some other initiatives, can make it more affordable again to employ young people and give them their chance.
It’s great for young people, but it’s also great for businesses. It’s mutually beneficial, so I hope this is just the start of more to come.
Interviewer: Simon, I have to apologise to you because we’ve only just started our conversation and I’m going to ask you to hold on for a few moments because the Prime Minister of Israel, Benjamin Netanyahu, is speaking now in response to those UK sanctions.
Before we went there, I was speaking to Simon Lancaster, who’s an insurance industry business owner and employer and has very patiently been bearing with us.
Simon, I appreciate that very much. Such is the joy of breaking news when it comes in. We have to be able to manoeuvre, so thank you very much for bearing with us.
Just to remind you, Simon and I are discussing how some of Britain’s retailers are offering 11,000 work experience placements for young people as part of the Government’s mission to cut youth unemployment. This is targeting 18 to 24-year-olds on Universal Credit.
From your perspective, Simon, what do you think the Government needs to do to make it easier for people like yourselves to take on younger workers?
Simon: I think some sort of financial assistance, really.
Like I was saying earlier, they have been caught up now in the minimum wage, which is great for those people, but it has taken away one of the incentives for businesses to employ younger people.
I’m not suggesting they scrap the minimum wage, but maybe compensate businesses that are taking on young people with some sort of levy.
There is an apprenticeship levy at the moment, but it’s not a huge amount of money, to be perfectly honest with you.
I think some financial assistance would always be beneficial because businesses really do want to give back and employ young people. It’s a great way to train, shape and mould young people into fantastic employees.
We’ve had over 30 apprentices in our business, and many of them are still there in team leader roles and have been there for many years.
It’s a great way of employing good, loyal staff by getting them in young.
I just think the Government needs to give a little bit of incentive, whether that’s financial assistance, help on National Insurance or various different things, just to make it more appealing.
When young people with no experience are the same price as older people with more experience, businesses will tend to go for the older person with experience just to play it safe.
I think there is more the Government can do, but this is a good start. Let’s give them credit where it’s due.
Encouraging work experience and apprenticeships, and even tackling the problem of NEETs, as they call them, is a good start. But they’ve got a bit further to go to help businesses.
We insure businesses. That’s what we do. We speak to lots of businesses, and they’re all finding the sorts of challenges that I’ve been explaining to you tonight.
Interviewer: In all fairness to you, Simon, you and your peers are businesses and you employ people. At the end of the day, you do have to make a profit.
So, I completely understand where you’re coming from in terms of what the Government needs to do and the incentives it needs to give businesses to take on younger people.
This leads me to some of the areas you’ve touched on: this whole cycle that we need to break of no experience, no job.
If you don’t give somebody the experience, how do they get the job? And if you don’t give them the job, how do they get that experience? This was something I personally went through when I was desperately trying to break into journalism.
Simon: Yeah, 100%. It’s chicken and egg, isn’t it? You need the experience to get the job, but you need the job to get the experience.
That is the challenge.
When I was an apprentice, and it is a few years ago, in all fairness, I was getting £40 a week. It was very cost-effective for that insurance broker to get me in.
I started at the bottom doing filing, making cups of coffee, as we all did, and started learning the ropes, listening to what people were saying and listening to calls, gradually gaining experience as I went.
I ended up managing that branch of insurance brokers, but you had to start at the bottom and it was affordable for that business to do it.
It’s not so affordable now because someone in the same situation I was in when I was 17 could cost the same amount of money as somebody in their mid-20s with seven or eight years of experience.
If you’re the person taking that gamble, with the new employment rights and so on, which one are you going to take the gamble on?
The dial has shifted a little bit away from making it attractive to businesses to support young people.
We all want to support young people, on the whole, morally, and it also makes good business sense, as I alluded to earlier, to get them in and learning the ropes early.
But the dial needs to drift back a little bit to make it more cost-effective so that we can help these young people and, in turn, help businesses to get these mutually beneficial relationships going.
It’s up to businesses as well. We’re being quite creative.
We’ve got an academy at the moment where we take people from outside of insurance. They might be in retail or hospitality, and we train them in insurance in batches.
We’ll have around 10 at once and train them together in a classroom-type environment.
So, it’s not just all about Government. It’s also up to us as businesses to be innovative and creative about how we tackle the problem of getting young, untrained people into our industries, training them up and turning them into the stars of the future.
Interviewer: There you go. It’s people like you leading the way there, which is a fantastic thing to hear.
Thank you very much, Simon, for taking the time to speak to us and also for your incredible patience.
That is Simon Lancaster, an insurance industry business owner and employer, speaking to us here on LBC News.
