Youth unemployment figures could soar by as many as 600,000 following the coronavirus crisis and affect work prospects for young people for years, a new report warns.
The study by the Resolution Foundation also suggests that the employment rates of graduates entering the labour market will be 13% lower in three years' time.
It paints an even bleaker picture for low-skilled workers, predicting their employment rates could fall by as much as 37%.
Those who are working are likely to face reduced pay, too. The report finds that one year after leaving education, the pay of graduates is projected to be 7% lower, and 9% and 19% lower for mid- and low-skilled workers.
COVID-19 pandemic could increase youth unemployment by 600,000 this year.— Nuffield Foundation (@NuffieldFound) May 6, 2020
Plus, long-term damage to young people's pay and job prospects unless major new support is provided.
New Nuffield-funded research from @kathleenhenehan @resfoundation https://t.co/RDynzu0oD8
Young People Hit the Hardest in Recessions
Research from previous recessions suggested that young people who have just left full-time education are hit harder than other age groups, said the report.
The think-tank’s report said the “corona class of 2020” – the 800,000 school leavers and graduates due shortly to join the labour market – was the most exposed age group to the likely unemployment surge caused by the economic fallout from the Covid-19 pandemic.
The latest figures from the Office for National Statistics showed that 408,000 people in the 18-24 age group were unemployed.
Given the acute challenges facing the ‘corona class of 2020’, the report says that the government should prioritise support in two areas: helping more young people to stay in education for longer, and targeting job support at those who are entering the labour market for the first time.
Corona Class of 2020
"The 'corona class of 2020' could face years of reduced pay and limited job prospects, long after the current economic storm has passed unless additional support is provided fast," said research and policy analyst and report author at the Resolution Foundation, Kathleen Henehan.
"The government must, therefore, work with education providers and businesses to do everything they can to limit these long-term scarring effects."
“A new maintenance support scheme could help thousands stay in education and build-up their skills, while those entering the labour market for the first time should be supported by a Job Guarantee offering critical employment experience.”
Currently almost a quarter of UK employees are on the government furlough scheme. The job retention scheme funds 80% of workers’ wages, up to £2,500 a month. HMRC said a total of 6.3 million jobs had been temporarily laid off by 800,000 companies with claims amounting to £8 billion by 3 May.
The UK currently has the highest number of coronavirus deaths in Europe, according to the latest government figures.
There have been 29,427 deaths recorded across the UK - a figure Foreign Secretary Dominic Raab said “was a massive tragedy” and 194,990 confirmed cases.