Young people in locked-down sectors of the economy face jobs crisis, says IFS

Young people working in the hospitality and retail sectors face a jobs crisis that will extend well beyond the coronavirus pandemic, a new report has warned, as Britain braces for a deep recession as a result of the crisis.

Research published by the Institute for Fiscal Studies (IFS) found growing evidence that the impact of the UK’s lockdown has “severely dented” young people’s work prospects.

It comes just days after prime minister Boris Johnson acknowledged the scale of incoming economic downturn to come, warning that “many, many” jobs would be lost in the coming months.

Over the last decade, young people entering the labour market have increasingly been working in relatively low-paid occupations, many of which have been hardest hit by the crisis, such as hospitality and non-food retail, the IFS report said.

The pandemic threatens to have a prolonged negative impact on young people by reducing demand for the jobs that are typical among early-career workers, the report added.

“Even a normal recession can be especially damaging for young workers. For example, hiring freezes disproportionately affect those coming into the labour market and those who would otherwise be climbing the jobs ladder,” said Agnes Norris Keiller, a research economist at the IFS.

“The recession associated with the Covid-19 pandemic threatens to be doubly bad for early-career workers, because the particular sectors being hardest hit are disproportionately likely to employ them.

“Early-career workers have become more concentrated in those lockdown sectors over time. Without effective action, young people are likely to find the economic costs of Covid-19 persist far beyond the pandemic itself.”

Researchers said lockdown sectors had become increasingly important due to expansion in the accommodation and food industries. The share of workers starting their careers in these sectors increased significantly in recent years, according to the IFS report.

In an economic recovery speech designed to reset the government’s agenda, Mr Johnson vowed on Tuesday to “build, build, build” as he outlined plans for £5bn in infrastructure investment and planning reform in a bid to stimulate growth ahead of the looming recession.

Speaking from Dudley, one of Labour’s former “red wall” seats, Mr Johnson attempted to liken his spending pledges to the those outlined in Franklin Roosevelt’s “New Deal”.

But critics quickly pointed out that the PM’s £5bn spending plans – amounting to roughly 0.2 per cent of GDP – were dwarfed by Roosevelt’s injection of spending during the Great Depression, which stood at around 40 per cent of GDP.

Labour leader Sir Keir Stamer suggested that there was “not much new” about it. At Prime Minister’s Questions on Wednesday, Sir Keir urged the government to place “a laser-like focus” on protecting jobs and called on the chancellor, Rishi Sunak, to extend the furlough scheme.

“There was nothing in the prime minister’s speech for the 3.2 million people in hospitality, or the 2.9 million in retail,” he said. “Next week’s financial statement could be the last chance to save millions of jobs. Will the prime minister start now by extending the furlough scheme for those parts of the economy still most at risk?”

But the prime minister insisted the “best thing we can do is get the economy back to health by getting our people back into work”. The furlough scheme – which is paying 80 per cent of the wages of 9.3 million workers – is due to be wound down from the end of July and closed in October.

At a coronavirus briefing later on Wednesday, the PM pledged to “guarantee” apprenticeships for young people whose job prospects have been badly hit by the pandemic. He promised that ministers would not be afraid to intervene to support jobs “as the months go by and the effect of this recession starts to bite”.

However, No 10 did not immediately release any details of how the apprenticeship guarantee would work, what sectors the scheme covers or who is eligible to apply.

Cat Smith, Labour’s shadow minister for young people, said: “Young people have been ignored by the government since long before the coronavirus crisis.

“After a decade of austerity, young people are facing surging housing prices, stagnating wages, and rising student debt. And the coronavirus crisis will only compound these issues.

“Many young people find jobs in the hospitality and retail sectors. The government must use next week to introduce a back to work budget which preserves those jobs, creates new jobs and provides job guarantees for young people to prevent long term unemployment.”

Mims Davies, the employment minister, added: “We’ve taken unprecedented action to support our economy during this health emergency, protecting millions of jobs, thousands of businesses and helping to ensure there are options for our young people leaving education or taking that vital next employment step.

“As sectors reopen, we’re already starting to see a lift in the number of vacancies and our dedicated Work Coaches are matching jobseekers to roles with local employers as we get Britain back working again.”