COVID-19 career disruption may have prolonged for young people - IFS

There is growing evidence that the lockdown has had particularly negative impacts on young people’s jobs and career prospects. As companies make redundencies and implement hiring freezes, many in the services industry or just out of education have reported difficulty finding work. On top of this, the furlough scheme has severely restricted opportunities for internal promotion. 

New IFS research, funded by the Turing Institute, suggests that this impact has been severe and that negative economic impacts on this age group may last well beyond the easing of the lockdown. 

Over the last decade, young people starting out in the labour market have increasingly been working in relatively low-paid occupations, or in junior roles. Many of these sectors correspond with the hardest hit by the pandemic, including hospitality and non-food retail. There have already been significant redundencies and company closures in these industries. In response to this, young people have adapted by taking roles in so called 'lockdown sectors' such the delivery and food preperation industries. 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. 

Agnes Norris Keiller, one of the authors of the briefing note and a Research Economist at IFS, commented that ‘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.’

Commenting on the report,  Cat Smith MP, Labour's Shadow Minster for Young People, said:

“Young people have been ignored by the Government since long before the coronavirus crisis. 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.”