Youth jobs crisis set to cost UK economy £7bn
A report by the charity, produced in conjunction with the Learning and Work Institute and HSBC, warns that young people will increasingly bear the brunt of the unemployment crisis, at a growing cost to the UK economy.
The study found that while some areas of the economy might begin on the road to recovery, young workers are under-represented in these sectors, while the industries that typically employ young people will be hardest hit in the long term.
The report found that the outlook for young people’s employment is worse compared to the outlook for older workers.
In addition to being over-represented in the sectors hit hardest by the pandemic to date, young people tend to be over-represented in the sectors that are forecast to see lower employment in the long term and under-represented in occupations which are likely to see the strongest job growth.
This suggests that, in addition to the greater risk of unemployment for young people during the pandemic, the longer-term structural changes in the labour market are likely to reduce future employment opportunities for young people without support to improve skills for the jobs available.
The report calculated the financial hit to the economy of higher youth unemployment due to the pandemic. It found that the economic cost of higher youth unemployment in terms of lost national output is forecast to be £5.9bn in 2021, rising to £6.9bn in 2022.
The fiscal cost of higher youth unemployment, in the form of lower tax revenue and higher benefit spending, is forecast to be £2.5bn in 2021, rising to £2.9bn in 2022.
The report also found disparities in the impact of the crisis on different groups of young people, raising concerns that the pandemic has, and will continue to, exacerbate pre-existing inequalities.
Analysis shows that the decline in working hours for young people with no qualifications (34%) has been five times higher than the decline for those with a degree level qualification (7%).
Demand for employees with lower-level qualifications is projected to fall in the short, medium and long-term, raising concerns that the employment prospects of young people who lack higher level qualifications will be further negatively affected.
Stephen Evans, chief executive of Learning and Work Institute, said: “Young people have been at forefront of the coronavirus jobs crisis. While we are hopefully slowly emerging from the worst of the pandemic, the legacy will be with us for years to come in the form of higher youth unemployment.
“This is not just bad for young people. It will have a huge hit on our economy and our public finances, and it risks a long-lasting scarring impact on those affected.”
Jonathan Townsend, UK chief executive of The Prince’s Trust, said: “This report is a stark warning of how the current economic crisis will have a scarring effect on young people, their earnings and prospects.
“We also know from 45 years’ experience of working with young people that youth joblessness can impact self-esteem and mental health for years to come, if we fail to act.
“Government, employers and charities must work together to ensure that the young people who need the most support are not forgotten. They need the opportunities to upskill, retrain and access job opportunities, or we risk harming not only our young people’s futures but the recovery of our economy.”