The second crisis hits as youth employment levels drop

The second crisis hits as youth employment levels drop

RL blog covid webBy Rosalind Lowe, Head of Policy and Engagement, the National Centre for Universities and Business (NCUB)

The World Heath Organisation (WHO) has warned that we could be on the edge of a second wave of Covid-19, with spikes in cases across Europe particularly amongst young people. As the press scrutinises the sharp rises in cases, another trend has gone largely unnoticed – a dramatic decline in youth employment, which, if left unaddressed, will have a permanent impact on the health of our economy and on individual livelihoods and opportunity.

Employment amongst 26-24 year olds

This week the latest ONS labour market data showed the immense difficulties that younger workers are facing in the Covid-19 labour market.  At a time that signalled the light at the end of the tunnel for many – with lockdown measures eased, a big fall in numbers of people away from work, vacancies rising and increases in hours and pay – those in less secure work, particularly the youngest and oldest, continued to face the toughest challenges.

The number of employees in the UK on payrolls in August was down around 695,000 compared with March 2020. Younger workers (those aged 18-24 years) experienced the largest decrease in employment and largest increases in unemployment, with 156,000 fewer employed people aged 16-24.

UK change in employment level by age (16 years and over), seasonally adjusted, between May to July 2019 and May to July 2020

RL blog graph

The sustained impact of the crisis on youth unemployment is sadly not unexpected. The Institute for Fiscal Studies warned several months ago that young people have been disproportionately impacted by the crisis as they are overrepresented in the sectors most affected by lockdown measures, such as accommodation and food services and arts, entertainment and recreation.  

The value of a degree

At this time of crisis, young graduates seem to be faring better than young people with lower-level qualifications. Many important graduate employment sectors, such as social care, IT, finance and health- have been less affected by Covid-19 than other sectors. The Institute for Student Employers (ISE) publishes regular analyses of the impact of Covid-19 on students and graduates. Their survey data suggests that on average firms are cutting entry level recruitment by around a quarter (23%) this year. This is impacting all types of hires, but at the moment graduates seem to be less affected than others. An ISE survey suggests that responding businesses plan to recruit 12% less graduates than they were going to before the Covid-19 crisis, which is very significant reduction. However, by comparison they anticipate recruiting 32% less apprentices and school leavers and 40% less interns and placement students.

This suggests that young people, many of whom have already faced disruption to their education, will also find it more difficult to find training opportunities. The latest data from the the Department for Education shows that apprenticeship starts have fallen by 68% for those under the age of 19 since lockdown. Those under 25 accounted for under a third of apprenticeship starts in May this year. At a time when young people may be relying even more on training and education, this is an incredibly worrying fall in opportunities.

In a time of uncertainty, more people are applying to University undergraduate and postgraduate courses, seizing the opportunity of higher education rather than face the uncertainty of the current labour market. However, with Covid cases on the rise, it remains to be seen how many people will actually enroll once the new academic year starts. 

Improving the prospects of young people

Employers, educational institutions and Government all have an important role to play in improving the prospects of young people. To recover from the pandemic and its economic impact, businesses will depend on a talented and adaptable workforce.  Many businesses will not return to a pre-Covid normal, but will instead evolve new work practices and adapt to changes in consumer behaviour and demand. This will have a profound impact on the competencies and skills employers need.

The Government has already announced a number of initiatives aimed at helping people back into employment, including the kickstart scheme that NCUB has welcomed. However the scheme is not without its limitations and will need drive to implement effectively. The latest business polling suggests fewer than one in twenty businesses intend to take part in the scheme, most likely due to bureaucratic complexity.

NCUB is working with its members to develop recommendations to Government ahead of the Comprehensive Spending Review, which is still expected to be published later in the year. Our submission will not just focus on the importance of responding to the emerging youth employment crisis, but will also emphasise the importance of preparing for future skills. Covid-19 is only likely to accelerate rapid technological change that will permanently transform our labour market. The clock is ticking and the Government, education providers and businesses must act now to save a generation of talent and save guard our future prosperity.

Date published: 17th September 2020

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