Coronavirus: Young people to be hit hardest by lasting impacts of crisis, says IFS

Graduates from school and university entering workforce at 'probably the most difficult time in living memory'

Young workers, alongside low-paid earners and women, will feel the worst of the effects of the coronavirus crisis in the UK, a study has found.

Researchers at the Institute of Fiscal Studies (IFS) said employees under the age of 25 were more than twice as likely as other age groups to work in a sector that has now been shut down as a result of the coronavirus lockdown.

The UK has been under strict social distancing measures since around mid-March, which has effectively led to the closure of numerous sectors, including non-food retail, hospitality, passenger transport, personal services and arts and leisure services.

Before the lockdown was put in place, sectors that are now shut down employed nearly 30 percent of all employees under the age of 25, said IFS researchers. This is compared to just 13 percent of workers aged 25 and above.

The pandemic is also likely to have a bigger impact on women than men, as women disproportionately work in retail and hospitality.

When analysing the disparity between earnings levels, the IFS found that people with the lowest earnings were seven times as likely to work in shut-down sectors as those with the highest-earnings.

“In the short run, many young people will have the cushion of the earnings of parents or other household members during the coronavirus pandemic,” noted the IFS.

“But the long-run effects of sector shut-downs on their career prospects could be severe.”

IFS director Paul Johnson told BBC’s the Today programme that two particular problems facing young people could be identified.

Firstly, he said: “There are those young people who are in those jobs at the moment or were in those jobs before Covid hit, and if they’re not able to get back into work then there may be longer term consequences for them.

“We know that periods of unemployment when you’re young can have long-term effects.”

The second problem they will have to grapple with is young people entering the workforce after leaving school or university. The current crisis means they are making their entry “in probably the most difficult time in living memory”.

Mr Johnson added: “Traditionally you’re going to be looking to start work in September, [but] now couldn’t be a worse moment to be doing it.”

The data comes as market research firm GfK recorded the biggest fall in consumer confidence in the UK in over 45 years.

GfK found that consumer confidence fell to -34 in late March from -7 in the previous month, as the crisis began to take its toll on people’s lives.

“Households’ willingness to make major purchases deteriorated sharply, despite a spike in demand for freezers, televisions and home office equipment as consumers prepare to spend more of the time at home,” said the market research firm.

The data also showed that people were expecting their personal finances and economic situations to take hits over the next 12 months.

The Trades Union Congress (TUC) on Monday called for universal credit to be boosted to support those who have been made jobless due to the crisis.

“We call on the government to urgently raise the basic level of universal credit. Restoring ‘replacement rates’ to the level seen before the long dismantling of the safety net began in the 1980s, would mean increasing the payment of universal credit to £165 a week – around 30 percent of average wages,” said TUC.

“But we think the government should be more ambitious to protect against this income drop. We recommend raising the basic rate of universal credit for this period to the value of 80 percent of weekly earnings at the national living wage – or £260 a week.”