Young workers suffer brunt of Covid jobs pain

Under-25s face suffering the consequences of falling out of employment during the pandemic for years to come

Young Britons have borne the brunt of the pain in the jobs market, with employment of the under-25s tumbling in the last year. 

Employment fell by 693,000 last month compared with February 2020, the latest pay as you earn (PAYE) tax numbers have shown. Two-thirds of the fall in payroll employment can be accounted for by young workers, according to the Office for National Statistics.

This does not include the self-employed, but still covers the almost 5m workers on furlough, as they are paid through the PAYE system.

Under-25s made up 437,000 of the drop. By contrast those aged 25 to 34 accounted for one quarter of the fall, or 174,000.

The larger category of 35 to 49-year-olds made up another 109,000.

The effect on older workers was markedly less severe: only 5,000 people aged over 65 left employment during the period. Meanwhile employment of those between 50 and 64 increased by almost 32,000.

In part this is because school leavers and university graduates have struggled to get their foot onto the first rung of the career ladder.

“The pandemic has had stark and unequal impacts, with young people and areas with high unemployment before the pandemic hardest hit. We’ll be living with its effects for years to come, with long-term unemployment already up by one third,” said Stephen Evans, chief executive of Learning and Work Institute.

As vaccine success allows us to look ahead, we should aim for better than a return to business as usual. That means making sure every young person has a job or training offer, including the 500,000 set to leave full-time education this summer, tackling the rise in long-term unemployment, and renewing our focus on the quality of work.”

Industry turmoil

It is also because Covid and subsequent lockdowns have delivered a particularly vicious blow to industries that employ large numbers of youngsters — hospitality and retail.

Accommodation and food services shed 368,000 payroll jobs. Wholesale and retail were down 123,000, while employment in the arts, entertainment and recreation were close behind, down 107,000.

These are already three of the four lowest-paying industries, meaning those who were in a poor position before the pandemic have been disproportionately hit.

By region, London —  a city with a relatively young population — experienced the biggest fall in payroll employment at 5pc, while Northern Ireland's 0.9pc fall was the smallest.

One consequence of these job losses is that average pay among workers has jumped by 4.8pc in the past year, its fastest growth since 2008.

Much of this is “a mirage created by many low-paid workers having lost their jobs”, said Ruth Gregory at Capital Economics.

“Excluding these compositional effects, underlying pay growth stood at about 3pc.”

The only sectors showing any growth are health and social work - up almost 132,000 - and public administration, adding 43,000 jobs.

The unemployment rate among 18 to 24-year olds has surged from 10pc at the end of 2019 to 13.2pc now, with close to one-fifth of those young adults now out of work for more than a year.

By contrast the overall jobless rate has edged up more slowly, rising from 3.8pc to 5pc.

For those aged between 25 and 49, the rate is still low by historical standards at 3.7pc.

Part-time workers and the self-employed have suffered significantly, even as full time employment has proven to be resilient.

A total of 21.4m are in full-time employment, up by more than half a million on the three months to January 2020.

Self-employed suffer

However part-time employment is down by 415,000 over the same period, with self-employment down by 661,000.

“In the year since the first lockdown, the self-employed have suffered a shattering financial loss — especially the 1.5m who were excluded from government support for much of this time. A large proportion of this group — particularly those working through limited companies — are also still excluded, with devastating financial consequences,” said Derek Cribb, chief executive of the Association of Independent Professionals and the Self-Employed.

“The pandemic has had a disproportionately damaging impact on the self-employed sector in the last year, with one in eight being driven out – into employment or out of work altogether – and many more struggling with severe financial loss.”

Meanwhile the Office for Budget Responsibility said Universal Credit and its predecessor benefits were expected to cost £79.5bn this financial year, up from £64.3bn last year.

More than 4m claimants were receiving UC in November, up from 2.4m in February, the OBR said.

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