Youth unemployment in Britain will reach the 1 million mark over the coming year unless the government provides job guarantees or incentives for school leavers and graduates to stay on in education, a thinktank warns.
The Resolution Foundation (RF) said that in the absence of action an extra 600,000 people under the age of 25 would swell dole queues, with a risk of long-term damage to their career and pay prospects.
The thinktank’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.
The thinktank said the crisis posed particular problems for young people. Ministers needed to respond with the offer of guaranteed jobs, focusing apprenticeship opportunities on young workers and introducing new maintenance grants to encourage the under 25s to extend their education by a year.
The RF said a short-term lack of job opportunities would lead to long-term scarring of young people. Its report said employment rates of graduates entering the labour market during this crisis were projected to be 13% lower in three years’ time than they would have been had the crisis never happened.
Employment rates for mid- and low-skilled workers risked falling even further (by 27% and 37% respectively).
Those who found work would be earning low wages, the RF said. A 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.
Over the past 10 years one in three non-graduates, and one in five graduates, got their first post-education employment in sectors such as retail, hospitality, travel and leisure – the sectors hardest hit by the lockdown.
Kathleen Henehan, a research and policy analyst at the RF, said: “The 800,000 young people set to leave education this year amid an unprecedented economic crisis are facing huge immediate unemployment risks, and longer-term damage to their careers.
“The ‘corona class of 2020’ could face years of reduced pay and limited job prospects, long after the current economic storm has passed, unless the government provides additional support, and fast.
“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.”
Meanwhile, a separate report highlighted the fragility of Britain’s companies affected by an extended lockdown. The fortnightly tracker from Opinium, a strategic agency, and the consultancy CEBR, found that more than a quarter of a million businesses would not be able to survive if trading conditions remained as they were for another month.
A second wave of coronavirus infections and a subsequent lockdown could prove fatal for the business community, with the survey suggesting that 1.1m businesses could not survive three more months of lockdown.
One in 10 British businesses, or almost 600,000, said there was a high risk they would enter insolvency owing to the coronavirus crisis.
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