Young people on the bus

"The next worry is for those entering work over the next couple of years... I fear they will be the truly unlucky generation."

The early 1980s were not a good time to be coming out of school or college. Nor was the period between 2008 and 2010. These were deep recessions and in recessions it is hard for young people to get good jobs. What’s more, the effect was long-lasting. If you are unlucky enough to enter the labour market in recessionary years, your chances of being in work at all, especially in well-paid work, five or even ten years later are damaged. Near-contemporaries who start their careers in more propitious economic circumstances do better. Some people get lucky, some don’t.

There can rarely have been a worse time to be looking for your first job than during the height of Covid. Millions were on furlough and firms weren’t hiring. During the first period of lockdown, up to the middle of 2020, the increase in the share of young adults working zero hours, either because of unemployment or furlough, was nearly double that for adults aged over 25. It was a similar story during the second and third lockdowns. There was also a collapse in the number of apprenticeships. In the first four months of lockdown, the number starting apprenticeships was 45 per cent lower than a year earlier.

On top of all that, the immediate toll that lockdowns took on young people’s mental health was much greater than for older adults. They coped less well with the enforced isolation and reported bigger deteriorations in their wellbeing.

That was all deeply worrying. It looked like we were in danger of another generation suffering long-term scarring and disadvantage in the labour market. Rishi Sunak, the chancellor at that time, was worried enough that he launched the £1.9 billion “Kickstart” scheme. It was designed to help those aged 16 to 24 on universal credit, deemed at risk of becoming long-term unemployed, to get into work.

What has happened since has taken pretty much everyone by surprise. There has been a jobs boom. The number of vacancies dropped by 60 per cent in the first half of 2020, but recovered within the year. Since 2021 we have had record levels of job openings. After the financial crisis, by contrast, it took more like six years for vacancies to return to their pre-2008 levels. What we have experienced since 2020 has been completely different to the aftermath of previous recessions.

That higher level of vacancies has been good for young people, not only in finding a job but also in moving between jobs. Whilst job-to-job moves among young people were depressed for years after the financial crisis, the share of young workers changing employers recovered quickly in late 2020 and exceeded pre-pandemic levels by 2021.

So what has been the impact overall? The initial loss of employment and training usually would result in long-term disadvantage, but the strong labour market should have helped. In new work, my colleagues Sam Ray-Chaudhuri and Xiaowei Xu provide an answer, and it is a broadly positive one. While the 2020 cohort of school and university graduates were much less likely to be in work three months after completing their education, within a year of graduating they were actually more likely to be in work than was the case for those graduating in 2018. And that wasn’t thanks to the great success of Kickstart; it didn’t manage even to spend the money allocated to it and was not desperately effective, in any case. It was the strong labour market that won out over the tricky start to working life.

It’s not simply getting any old job that matters. The quality of the job and the chances for career progression are just as important. Evidence from previous recessions is not encouraging. Cohorts entering the labour market when the economy is weak tend to find lower-quality jobs or jobs that are poorly suited to their skills. Yet here again the story is different, and in a good way. On most measures of job quality, the Covid generation has not suffered relative to their immediate predecessors; they are just about as likely to be in a permanent job, to be getting training and to be in a professional job, for example.

The fact that there are so many jobs around and that youngsters are moving jobs more frequently is likely to be especially good news. Evidence is clear that movement between jobs has become more and more important over time as a way of progressing. It may have once been the case that the main route to secure well-paid employment was to join a big firm, sit tight and move up the internal career ladder. For many more young people today, the best advice is to move up by moving out.

Of course, not all is well. Younger workers are doing no better than everyone else when it comes to pay. Their living standards are still squeezed. While there was a swift bounce back in the state of their mental health for most, a minority is suffering serious long-term fallout from the pandemic.

The number of young people newly putting in claims for disability benefits as a result of mental health problems has much more than doubled. Then there are the unknown longer-term effects of working from home on wellbeing, skills formation and the building of networks.

The next worry is for those entering work over the next couple of years. They have missed out on education and have endured social isolation in their teens. The evidence on the damaging effects on their wellbeing and resilience is multiplying. And the consequences especially for the education of less advantaged students have been grim. Moreover, jobs might not be quite so plentiful in a few years time. I fear they will be the truly unlucky generation.

This article was first published in The Times and is reproduced here with kind permission.