‘YOUNG PEOPLE have been ignored by the government,’ Cat Smith MP, Labour’s Shadow Minister for Young People said reacting to the new Institute For Fiscal Studies (IFS) report on career disruption to young workers caused by the coronavirus pandemic.
She said: ‘After a decade of austerity, young people are facing surging housing prices, stagnating wages, and rising student debt.
‘And the coronavirus crisis will only compound and exaggerate these issues.
‘Many young people find jobs in the hospitality and retail sectors.
‘The government must use next week to introduce a Back to Work Budget which preserves those jobs, creates new jobs and provides job guarantees for young people to prevent long term unemployment.’
The IFS said: ‘There is growing evidence that the lockdown has had particularly negative impacts on young people’s labour market outcomes.
‘New IFS research, funded by the Turing Institute, shows that the Covid-19 pandemic threatens to severely disrupt the career progression of young workers, suggesting that negative economic impacts on this age group may last well beyond the easing of the lockdown.’
The new research finds that:
- Over the last decade, young people starting out in the labour market have increasingly been working in relatively low-paid occupations, many of which are in sectors hardest hit by the Covid-19 crisis – for example, hospitality and non-food retail.
- The growing importance of those ‘lockdown sectors’ as employers of workers at the start of their careers is primarily due to an expansion of the accommodation and food industry.
The share of workers starting their careers in this sector increased by about 50%, from 6% to 9%, between 2007 and 2019.
- As other sources of wage growth have dried up, young workers have become increasingly reliant on moving into higher-paying occupations as a source of early-career wage growth.
Around 28% of wage growth over the first five years of the careers of workers born in the 1970s could be attributed to moving into a higher-paying occupation. This had risen to 50% or more among people born in the 1980s.
- The pandemic threatens to have a prolonged negative economic impact on young people by reducing demand for the jobs that are typical among early-career workers and making it harder for workers to find better opportunities than their current jobs.
- The government should have a particular focus on the challenges facing the young as it attempts to manage the labour market impacts of Covid-19 in the coming months.
Agnes Norris Keiller, an author of the briefing note and a Research Economist at IFS, said: ‘Even a normal recession can be especially damaging for young workers as, for example, hiring freezes disproportionately affect those coming into the labour market and those who would otherwise be climbing the jobs ladder.
‘The recession associated with the Covid-19 pandemic threatens to be doubly bad for early-career workers, because the particular sectors being hardest hit are very disproportionately likely to employ them. Indeed, early-career workers have become more concentrated in those lockdown sectors over time. Without effective action, young people are likely to find the economic costs of Covid-19 persist far beyond the pandemic itself.’
Meanwhile, a new study estimates more than one million people aged between 18 and 24 will not be working by the end of the year.
An entire generation of young people could face a jobs crisis with youth unemployment topping one million.
A study from the IPPR think tank estimated that an extra 620,000 people aged between 18 and 24 will be without a job by the end of the year, on top of the 410,000 already unemployed.
This will be the greatest number of young people unemployed on record, surpassing the levels seen in the 2008/9 and 1990s recessions, said the report.
This should be a major cause for concern because being out of work at an early age can cause serious ‘scarring effects’ on people’s life chances including lower wages, increased risk of further unemployment and worse health into later life, according to the think-tank.
Harry Quilter-Pinner, IPPR senior research fellow, said: ‘We face an unemployment crisis in the UK.
‘Our analysis suggests youth unemployment could more than double by the end of the year.
‘This would be a huge waste of talent and potential. It doesn’t have to be like this.
‘That’s why we are calling on the government to step in to guarantee all young people either a funded place in education, an apprenticeship or a job.
‘This will require the state to support businesses to take on young people, just as it has supported them to retain adults through the furlough scheme.’
- New analysis published by the TUC shows that young workers (aged 25 and under) in the North West face the highest risk of unemployment due to the coronavirus crisis.
Workers in all sectors of the economy face employment risks due to the coronavirus crisis and the recession that is expected to follow.
However, two sectors are at much higher risk of losing jobs compared to others: ‘accommodation and food’ and ‘arts, entertainment and recreation’.
Their analysis uses three measures to assess risk, rate of furloughed workers, the proportion of businesses that have paused or cancelled trading, and the proportion of businesses with turnover falling more than 50%.
These two sectors not only rate the highest for all three measures, they are also in a league of their own, with rates far exceeding the construction sector in third place.
The analysis suggests that, without urgent action, the North West may be on the brink of a surge in youth unemployment.
Of 508,000 UK workers aged 25 and under in the North West, 108,000 work in accommodation and food, or arts, entertainment and recreation.
It means that 21% of North West workers aged 25 and under work in these two sectors, compared to 5% for workers older than 25.
North West workers aged 25 and under are therefore four times more likely to work in one of the two sectors where jobs are at greatest risk.
- One in five workers has skipped meals over the past year to make ends meet, according to research by the Trades Union Congress.
When asked the same question two years ago, one in eight respondents said they had gone without food because they were short of money.
This year almost a fifth said they have gone without heating because they were unable to pay for it, while a similar proportion said they had pawned or sold possessions to pay the bills.
Of 2,700 people polled, 30 per cent said they would not be able to pay an unexpected £500 bill – up from 24 per cent in 2017.
Two-fifths of respondents said their biggest concern about work was that their pay was not keeping up with living costs, while one in 10 said they had been unable to pay their rent or mortgage on time.
The figures highlight a ‘toxic mix’ of insecure work, low pay and weak wage growth that has hurt living standards for millions of Britons, the TUC said.