Following the last recession, it was young people who bore the brunt of the unemployment crisis that was inevitable following the economic downturn.
Whilst a report from the IMF has recently suggested that the long-term economic damage from the pandemic will not be as severe as that left by the financial crisis more than a decade ago, many believe that young people will still be those most affected by the decline in economic activity.
Much of this has to do with the fact that there tends to be more young people employed in those sectors such as wholesale, retail, accommodation and food services that have been hardest hit by the Covid-19 pandemic. As a result, they have experienced the highest drop in working hours of any age group and a massive decline in the vacancies available. As a result, there may well be a longer lasting impact on opportunities in the labour market for young people despite an expected economic recovery.
Earlier this month, a report from The Prince’s Trust and the Learning and Work Institute supported this data and warned that increased youth unemployment could have a significant impact on the UK economy
Utilising a survey of 1,280 employers and 2,092 young people aged 16-24, “Facing the future - employment prospects for young people after Coronavirus” showed that young people had faced a greater risk of unemployment during the pandemic.
For example, younger workers were more likely to have been placed on furlough through the Coronavirus Job Retention Scheme than older age groups. In addition, the impact was not the same for all young people with those with no qualifications experienced five times the drop in the number of working hours as compared to graduates.
If that wasn’t bad enough, it would seem that longer-term structural changes in the labour market are also likely to reduce their future employment opportunities.
According to the report, the outlook for young people’s employment is worse compared to the outlook for older workers. In addition to being over-represented in the sectors hit hardest by the pandemic, there are also more young people in the sectors that are forecast to see a slower recovery such as retail and arts/entertainment. In addition, they are under-represented in occupations which are likely to see the strongest growth in employment such as health and social work.
What is of interest is that these projections are supported by the survey of employers with 41% suggesting that the pandemic will, over the medium term, have a negative impact on the employment prospects of young people in their sector with only 22% believing that the impact would be positive.
The only sectors where more employers thought the impact of the pandemic on young
people’s employment prospects would be positive were transport and distribution and the NHS. Not surprisingly, those based in the hospitality and leisure sector predicted the strongest negative impact for their employees.
So what effect will this have on the UK economy? According to the economic modelling undertaken for the study, the cost of higher youth unemployment in terms of lost national output is forecast to be £222 billion between 2021 and 2025 with youth unemployment reaching 757,000 in 2022 (or 17.5%).
It is clear that this growing crisis will not be solved by a short term fix and even with a return to growth in the economy, dealing with long-term youth unemployment must be a priority for the UK and devolved governments over the next few years.
So what can be done? The report suggests that one of the priorities needs to be one of protecting jobs as the UK emerges from the pandemic and calls for an extension of the current furlough scheme beyond September 2021 as there is a risk that thousands of furloughed young workers will become unemployed when the scheme ends. It also proposes improving the kickstart scheme and apprenticeship programmes.
However, it is clear that these will only scratch the surface of the problem that is fast approaching and as a result, it is imperative that there is a more substantial policy to ensure that young people do not fall through the gaps in support not only in terms of work but also education.
Given this, the report recommends that a Youth Guarantee should be introduced to prevent long-term youth unemployment and thus ensuring that all young people who are unemployed and not in education are able to access a job, an apprenticeship, or an education or training place. This would be underpinned by a Job Guarantee for those unable to find work so that youth unemployment is dealt with at the source.
Given that politicians are constantly talking about how the youth of today are the future of our economy, it is clear that without a clear strategic approach to support young people in the labour market, they will experience high levels of unemployment as they have done in previous recessions. That simply can’t be allowed to happen and it is only right that there is concerted effort and action to ensure we do not have a lost generation as result of this pandemic.