Covid generation: UK youth unemployment 'set to triple to 80s levels'

Resolution Foundation report warns young people could be lost to long periods out of work

Youth unemployment in Britain is on course to more than triple to the highest levels since the early 1980s, according to a report warning that a “Covid generation” could be lost to long periods out of work.

The Resolution Foundation said the young, together with pension-age workers, are the most at risk during the second wave of the pandemic, amid rising concern over job losses as the government prepares to close the furlough scheme at the end of this month.

The RF researchers said unemployment among economically active 18- to 29-year-olds could hit 17% by late 2020. This is the same level as in 1984, when Britain was undergoing economic disruption under Margaret Thatcher’s government.

Youth unemployment – which does not include people in education – currently stands at a record low of 5.5%.

The thinktank based its estimate on figures from the Office for Budget Responsibility, the government’s economics forecaster, which warned in July that the jobless rate for all age groups could reach 11.9% by the end of 2020 – meaning 4 million unemployed, up from 1.4 million at present.

Unemployment chart

Two weeks after the chancellor, Rishi Sunak, announced fresh support designed to help businesses and workers through a difficult winter, the thinktank warned the government’s furlough replacement – the job support scheme – would fail to prevent a significant rise in unemployment.

Designed to support the wages of workers on reduced hours in “viable” jobs, it said the scheme and other government measures “may prove insufficient in the key low-paying sectors most affected by ongoing restrictions, with little said so far on boosting job creation in other sectors”.

Furlough graphic

Publishing the findings of its annual intergenerational audit amid mounting concern over the economic fallout from the Covid second wave, the thinktank said the youngest and oldest workers in Britain were overrepresented in jobs where the toughest public health restrictions have been imposed – such as in hospitality, leisure and retail.

Suggesting a U-shaped pattern for the impact of the pandemic on different age groups, it said more than half of under-25s and over-65s had either been placed on furlough at some stage or had lost their jobs, compared to less than one third at other ages.

However, the report warned the impact would be worse for young adults given the lasting damage from unemployment early in their careers and because of a broader deterioration in living standards compared to their parents generation.

Issuing a warning over the mental health risks linked to lockdown and economic insecurity, the thinktank said the proportion of adults experiencing poor mental health had increased by 80% among 18- to 29-year-olds compared to a year ago, the biggest increase of any age group.

In a sign of the financial impact of the crisis, it said about one-in-seven people under the age of 30 have missed a rent or mortgage payment since the pandemic began, compared to just one-in-thirty 60- to 69-year-olds.

It also said young people were more likely to be living through lockdown and working from home in cramped, damp homes without gardens – finding that 16- to 24-year-olds have on average 26 sq metres of liveable room in their homes per person, compared to 50 sq metres for those aged 65-plus.

David Willetts, president of the Resolution Foundation, said the growth over recent decades of a high-cost, low-security private rental sector had created a series of problems for younger generations during the pandemic.

“It has also reinforced the underlying trends for younger people to have less wealth than young people did a generation ago, while increases in the value of houses and pensions particularly benefit older generations,” he said.

The Conservative peer, who served as a minister under David Cameron, said the government had to take urgent steps to support young adults. “With infections rising again, the Covid crisis is sadly far from over. That means the risk of losing a Covid generation to long-term youth unemployment is real. But there is plenty that policymakers can do to prevent it – from extra training provision to a greater focus on creating new jobs to support people out of this crisis.”

Contributor

Richard Partington Economics correspondent

The GuardianTramp

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