There is growing evidence that economic consequences of the COVID-19 pandemic are particularly negative for young people. Young people are most likely to be employed in sectors that have been shut down as part of the UK lockdown, and are also more likely to have lost their jobs. The aim of this report is to look at how the economic repercussions of the pandemic threaten to disrupt the career progression of young workers. It is important because the negative economic impacts on younger people, in particular, may last well beyond the easing of the lockdown.
The study was a systematic review of available data and literature on the labour market in the UK, in order to explore the impact of the coronavirus pandemic on the career prospects of young people in the UK. What constitutes a ‘young person’ isn’t defined in the report; the authors include data that is split by age group, or by whether the individual is in their first job, in order to understand how the job market affects different age groups.
Low pay: Over the last decade, young people starting out in the labour market have increasingly been working in occupations that are relatively low-paid. For example, people born in the 1980s are more likely than those born in the 1970s to start their careers in low-paying occupations such as customer service assistants and nursery workers, and less likely to start in mid-paying occupations such as jobs in metal manufacturing and secretarial work.
Low-paying sectors: As bad luck would have it, many of these low-paying occupations are in sectors hardest hit by the COVID-19 crisis: for example, hospitality and non-food retail. In 2007 around 19% of all people aged between 22 and 25 working in their first full-time job after leaving education were employed in sectors that were essentially shut down during lockdown, while by 2019 this had increased to 22%. By contrast, the share of all employees working in shut-down sectors had fallen slightly from 17% in 2007 to 16% in 2019.
Starter jobs: 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.
Wage growth: 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 around 50% among men born in the 1980s and women born between 1980 and 1984, and to 60% among women born between 1985 and 1989.
Conclusion: The COVID-19 pandemic has severely dented the career prospects of young people and threatens to have a prolonged negative economic impact on them as a result. Sharp contractions in shut-down sectors will make it harder for young people to take their first step onto the career ladder, while reduced job opportunities will make it harder for them to move into higher-paying occupations.
The review concludes that although consumers are generally behaving rationally to maximize their own utility, some are still shown to misuse their credit cards, make obvious mistakes, suffer from various behavioural biases and sometimes suffer exploitation by the banks. The authors recommend both increasing consumer awareness of the issues, via adverting or educational programmes and increasing regulations on card issuers, such as limiting fees, and making contracts easier to understand.
Points to consider
Methodological strengths/weaknesses: This study was not intended to be a full literature review, but to bring together data that looks at the specific research question.
However there are no details given about how the review was conducted, or how the reports that were reviewed were chosen.
- The papers referenced are all from reputable sources, including the Office for National Statistics, the Resolution Foundation, and other internal IFS papers, which all give the findings credibility.
Relevance: Although conducted in the early days of the coronavirus pandemic, the report remains relevant as the impacts of lockdown will continue into 2021 and beyond
Generalisability/ transferability: The report deals specifically with young people in the UK and shouldn’t be generalised to other groups or markets. It does mention that there is an impact on older people too, but this isn’t the focus of the study.
- This report is applicable to anyone with an interest in young people and their careers and development, such government, support agencies, policy makers, policy implementers, regulators or educators.