Dire problems for young workers?

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By Professor Stan Siebert, Professor of Labour Economics
University of Birmingham


Young job seekers have been in the firing line during the past year’s slump. They are the classic “outsider” group, without a track record, trying to find their place in the world. They benefit most when times are good, but hurt most when times are bad, as they certainly have been. However, the UK’s flexible labour market has in the past helped outsiders, and so long as the vaccine rollout allows a quick return to normal, there is reason for hope.

It is true that vacancies currently are 26% below their level a year ago, but this aggregate is composed of very different industry trends. Public administration vacancies are actually up 50% over the year — but of course jobs here are generally for more skilled older workers. In accommodation and food services vacancies are down -75%, and in retail trade down -50%. This is where the entry jobs used to be. They will return when the lockdown ends.

The trends for jobs over the past decade are summarised in the table below. For the 16 and 17 year old category, we see that employment is about 100,000 lower. Their employment rate has fallen from 22% at the beginning of 2020 to only 17% now. In other words, about 1/3 have lost their jobs. For the 18-24’s, employment is also sharply lower, corresponding to a 4 percentage point fall in their employment rate. For the workforce as a whole, there has not been so much of a fall, only 1 percentage point, since the public sector and health sectors have expanded. 

  16-17 18-24 Total,16 to 64
  Employment

(m)

Emp/

pop

Unemp

rate

Emp/

pop

Unemp

rate

Emp/

pop

Unemp

rate

Average 2010-18 0.34 24% 29.2% 60% 14.1% 73% 6.1%
Jan-Mar 2020 0.33 22 24.6 64 10.7 76 4.1
Oct-Dec 2020 0.24 17 25.3 60 13.4 75 5.2

Employment Trends 2010-20 Source: Office for National Statistics, Labourforce Survey, seasonally adjusted; emp/pop gives the % of the group’s population in employment, e.g. 24% of 16-17s were employed on average 2010-18.

But the table’s data also show that young workers have always had low employment prospects, and high unemployment rates. This is an insecure time of life. For the 16-17s, the average for their unemployment rate 2010-18 was 29.2% (if this seems bad, other EU countries are similar). Unemployment was more satisfactory just before the pandemic, at 24.6%, but has since increased to 25.3%. There has also been an increase in unemployment for the 18-24s. However, the current unemployment is not high in historical terms, the implication being that it can brought under control reasonably easily.

Life is uncertain for all young people at the moment, including graduates. According to the Financial Times, about 12% of recent graduates are currently unemployed. However, unemployment is even higher for young workers in general as we can see. As usual, it is those without qualifications whose position is worst.

The important thing is to have an early return to normality. Young workers have suffered during this lockdown, but this is as expected (it’s important to note that older workers, over 50, have suffered most from redundancies). Fortunately, the UK has a youth sub-minimum wage which means that young workers are not priced out of jobs. Also, it is important to keep income taxes and national insurance charges low, since low productivity workers cannot bear such charges. Within this framework, we can be optimistic, but all depends upon swift easing of the lockdown.



The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of the University of Birmingham.

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