Employing and training youth could generate 1.2 trillion

26 October 2015 Consultancy.uk

Youth unemployment remains an issue across developed economies. In some, more than half of those aged 20-24 are not in employment, education or training (NEET). In a recent index from PwC, the firm looks at how youth employment engagement has changed since 2005, finding that the situation declined significantly in Spain and Italy. For the UK, reducing the NEET rate to that of the best-in-region has the potential to add £55 billion, while for the 34 countries together an additional $1.2 trillion would be generated.

Since the 2008 economic crisis, the youth in the world’s developed countries have faced an uphill battle securing a place for themselves within their respective economies. In many countries youth unemployment skyrocketed, leading pundits to talk about a ‘lost generation’. The consequences for those out of employment for a length of time come with negative effects on future employability, productivity and broader life chances – exuberating further conditions such as crime, drug abuse and critically questioning the system. 

Methodology

Levels of unemployment vary considerably across various developed countries however. Germany’s youth (15-24) unemployment has fallen to below pre-crises levels to 8%, while in Spain and Greece levels have jumped to above 50% in recent years. Furthermore, the number of youth (20-24) not in employment, education and training (NEETs) stands at 10% in Germany, Switzerland and Austria, while being above 30% in Turkey, Italy, Greece and Spain.

In a study by PwC, titled ‘PwC Young Workers Index’, the professional services firm ranks 34 developed economies in terms of their levels of youth economic engagement. The index is developed from 8 variables, including NEETs (20%) and employment rate 15-24 (20%). The data is then used to explore in how far disengagement is costing the relevant economies relative to high performers like Germany in the long term.

Top and bottom index ranks

Top and bottom ranked
The top ranked country on the index is Switzerland. The country has been in the number one position since 2006, enjoying high levels of youth employment, low NEET rate and low school dropout rates. Germany comes in at number 2, up from number 8 in 2006. Austria also continues to score well, at the number 3 spot since 2011 and up one spot on its 2005 ranking. On the other end of the scale are Spain, Greece and Italy. These countries continue to present high levels of unemployment among youth, at 53% in Spain, 52% in Greece and 40% in Italy. Long term unemployment (15-24) is also a considerable issue in the bottom three, standing at 60% in Italy and 40% in Spain.

The UK comes in above the average across the 34 economies, at number 21. Youth unemployment stands at around 20%, with a similar NEET rate. The long-term unemployment rate stands at 30%, highlighting that many young people have become trapped.

Ranking movement

Some countries have been able to improve their lot considerably in recent years. For instance, Israel jumped from 32nd spot to 9th in the past decade, while Poland has moved up 8 spots. On the other side of the spectrum, Ireland dropped from 7th place to 29th place, while Spain is up from 19th to 33nd. The UK has remained relatively stable, moving down one spot from 20th to 21st.

Economic benefit
The analysis considers how changes to the NEET rate for 20-24 year olds might affect the long term individual earnings outcome, and therewith, overall economic activity. Based on an economic study by York University for the UK National Audit Office, the consultancy estimates that the present value of lifetime economic gains from a person being moved out of the NEET category might be around £140,000 at 2015 earnings levels. Dropping the NEET rate from the UK’s around 20% to Germany’s 10% would add an additional 3% to the UK’s GDP or £55 billion at 2015 GDP values. The value would be built across a long time period as youth are helped into work.

Economic benefit of moving out of NEET

For other countries, improvements to NEET scores could greatly improve respective economies. Italy could stand to gain an additional 8% of GDP, while Greece would be boosted by 7.8%. The US could see gains of 2.9% while already high performing economies, such as Norway and Sweden would see gains of 0.2% and 0.9% respectively. Across all of the 34 countries considered, a total economic boost of $1.2 trillion could be realised.

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Project management industry adds £156 billion of value to UK economy

15 April 2019 Consultancy.uk

Project management has grown into one of UK’s largest areas of business over the past decade, amid the increasing ‘projectification’ of work. With the gross value added to the UK economy by project management estimated to be £156 billion, this trend is likely to continue in the coming era.

Despite the huge success of project management in recent years, until now there has been relatively little data available on the size of project activity. As a result, there has been a great deal of debate on things like the number of people involved in the sector, the number of projects, and how it contributes to economic output. Due to this need for clarity, APM, the UK’s professional body for project management (the largest organisation of its kind in Europe, with 28,000 individual members) commissioned economists from PwC to shed light on the industry's economic impact.

The research concluded that the profession makes a more significant contribution to the UK economy than the financial services sector. 2.13 million full-time equivalent workers (FTEs) were employed in the UK project management sector, generating £156.5 billion of annual gross value added (GVA). In comparison, the financial services sector contributes £115 billion, and the construction industry adds £113 billion.

Gross value added to UK economy

Commenting on the discovery, Debbie Dore, Chief Executive of APM said, “Project management runs as a ‘golden thread’ through businesses, helping to develop new services, driving strategic change and sector-wide reform.”

Who is a ‘project manager’?

To reach these estimates, PwC’s researchers used detailed models to map out the value of project management activity. They ultimately defined relevant ‘projects’ as “temporary, non-routine endeavours or rolling programmes of change designed to produce a distinct product, service or end result… [with] a defined beginning and end, a specific scope, a ring-fenced budget, [and] an identified and potentially dedicated team with a project manager in charge.”

Building on this, they then went on to define what the act of project management actually is. The job consists of applying “processes, methods, knowledge, skills and experience” so that clients can meet their objectives and bring about planned outputs or outcomes. The analysts added that this includes “initiating the project, planning, executing, controlling, quality assuring and closing the work of an identified and dedicated team according to a specified budget and timeframe.”

Importantly, it should be noted that the profession is not exclusive to only roles explicitly labelled as ‘project manager’, but to any role where specialist project management skills are used. This means that across sectors these roles can have very different titles, from the self-explanatory contract managers of procurement, or the campaign managers of advertising, to the likes of festival co-ordinators in the events sector, and many more. The roles in question also span all strategic levels of the profession, from strategic to tactical and operational positions.

Gross value added of project management profession

From a sector perspective, the financial and professional services, construction and healthcare industries make up almost two-thirds of the total project management GVA. At the same time, understandably, the UK Government has a huge project portfolio, which further drives the size of the GVA the sector contributes, thanks to megaprojects like HS2 and Crossrail.

Commenting on this to the report’s authors, Oliver Dowden, Minister for Implementation remarked, “Project delivery is at the heart of all Government activity, whether it’s building roads and rail, strengthening our armed forces, modernising IT or transforming the way government provides public services to citizens. Getting these projects right is essential if we are to ensure that we build a country that works for everyone.”

Throughout 2019, 26 major government projects were delivered, representing a fifth of the overall Government Major Projects Portfolio (GMPP) of 133 projects. According to the IPA annual report 2017-18, these represented a whole life cost of £423 billion. In addition to this were a plethora of smaller scale projects, and those in early development.

Elsewhere, with the increasing digitalisation of the economy impacting entities of all shapes and sizes, IT and digital transformations tended to dominate the projects of the UK scene alongside new product development projects, with a respective 55% and 46% of organisations in the research sample having undertaken these types of project in the past year. At the same time, this varied across sectors, and unsurprisingly, in the construction and local government sectors, fixed capital projects were the main project type undertaken.

Outlook

Looking to the future, 40% of business leaders expect project management will grow in the coming years due to the increased use of projects – or the ‘projectification’ of the UK. In a trend that has been witnessed elsewhere, organisations have to rapidly and continuously change in the digital age of business, driving the need for project management.

Outlook for project management services

An increased focus on value over cost – especially in the construction sector – and a forecast increase in the number of international projects are predicted to be key drivers of growth, according to the expert contributors. However, this will not happen in the absence of challenges; more than half of organisations expressed concern over the perceived impact of political uncertainty in the UK. Skills and capability shortages were also cited as a potential barrier by a third of organisations.

With regard to budgets, meanwhile, a third of those surveyed by PwC said they expect the size of project budgets will increase in the coming three years, while 40% anticipate a growth in project size. As the profession continues to mature, and as the recognition of the importance of good project management grows, it is expected that a greater proportion of project work will gain more distinct attribution to the profession itself, giving more recognition and appreciation to the role of the project manager.

Speaking on the findings of the study, Sandie Grimshaw, a Partner at PwC, concluded, “The project management profession is relatively new compared to some other professions, such as lawyers, teachers and doctors. However, as project management is a core competence vital to organisations in the UK, the profession is critical and will continue to grow in stature.”