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  • Writer's pictureValeria Martinez

Covid-19's rise in unemployment hits the UK's youngest workers the hardest: The scarring effects

Updated: Apr 8, 2021

At the start of 2020, the youngest members of the labour force were preparing to throw themselves into one of the most promising global job markets in decades. At that point, a year before the pandemic hit, the youth unemployment rate in the United Kingdom stood at 10.8 per cent, the lowest in a generation and far below the 2011 peak which saw about one in five young people out of work.

In a matter of months, the global coronavirus crisis cast a shadow on the hopeful job market as unemployment soared, with young people between the ages of 16 and 24 finding themselves at the sharp end.

The latest Office for National Statistics (ONS) labour market survey reveals that youth unemployment was estimated at 14.5 —0.9 percentage points higher than the previous quarter.

Despite improvements in recent years, young people aged 16 to 24 were already disproportionately adversely affected in the labour market compared to other age cohorts before the pandemic. In the three months to February last year, the youth unemployment rate was 11.8 per cent —more than double that of the general population, of 4 per cent.

There are fears that the worst is yet to come as England enters its third lockdown and the Brexit transition period ends. The government’s furlough scheme, extended until April 2021, also makes it hard to see the real picture.

“The risk of losing a covid generation to long-term youth unemployment is real,” said David Willetts, President of the Resolution Foundation, a think-tank that believes youth unemployment is at risk of reaching figures not seen since the 1980s.

The youth employment plunge has been compounded by the economic consequences of the health crisis. The hospitality and retail sectors, in which young workers are often over-represented, were among the worst-hit.

The estimated unemployment rate among those aged 16 to 24 in the last quarter was 3.3 percentage points higher than a year earlier —compared to a rise of 0.9 percentage points for those aged between 25 to 49.

The UK region with the highest youth unemployment rate estimate was London at 25.2 per cent, up 5.5 percentage points from the same period last year, while Scotland rose 1.4 percentage points at 10 per cent.

The East Midlands reported the highest yearly rate increase at 6.8 percentage points. The North West and the North East were the only regions where the unemployment rate among young workers decreased.

The rapid growth of joblessness among the youngest members of the British workforce triggered by the Covid-19 pandemic poses long-term risks to the economy.

Apart from the immediate harm to education and job opportunities, there is the threat of what economists refer to as ‘scarring’, where periods of youth unemployment do long-term damage to young people's training, income levels, career prospects and even mental well-being.

A study by the London-based Centre for Economic Policy Research found that even one month of unemployment for those aged 18-20 reduced 2% of total lifetime income.

One lasting effect that is likely to follow the Covid-19 pandemic, and that has occurred in previous crises, is that young people making the transition from education to work will find it more difficult to find employment at entry-level positions due to increased competition and declining vacancies.

For many recent graduates, the pandemic has turned their future career plans upside down. Owen Hewit, a recent aeronautical engineering graduate with a masters degree, says the current crisis has made job-hunting a lot tougher.

“It's really hard to take all the rejections and it's now very difficult to even get a part-time job while you're searching, every job has thousands of applicants so it feels like it'll be impossible to be noticed,” he says.

He is not hopeful things will improve after the pandemic. “There's going to be just as many graduates coming out this year and next year, and unless I can find something I don't see how I would be able to make myself more employable than a fresh graduate.”

In September, the government opened its £2bn Kickstart Scheme to provide jobs for as many as 250,000 unemployed young people. Chancellor Rishi Sunak said the scheme would “open the door to a brighter future for a new generation and ensure the UK bounces back stronger as a country”.

The programme currently only offers help to those who have been out of work or education for six months, meaning those who have been laid off this month may not eligible until May next year. The Alliance for Full Employment (AFFE) —formed by Labour representatives to lobby for economic recovery — deems this insufficient.

Former prime minister Gordon Brown, an AFFE supporter, said in a statement: “We urgently need to get ahead of the surging unemployment curve. Otherwise, long Covid will also mean 1980s levels of long-term youth unemployment.”

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