Young adults could be scarred for years to come with a warning that up to 350,000 pay lose their jobs as the furlough scheme comes to an end
Research from the Institute for Fiscal studies (IFS) published today says that the furlough scheme and the option (for many) of living with their parents have papered over the cracks, protecting their living standards and, most likely, substantially reducing their risk of falling into poverty.
But young workers are still more likely than older workers to be furloughed, the support from the furlough scheme is being wound down, and living with parents is often not a sustainable or desirable long-term option.
Xiaowei Xu, an author of the report and a Senior Research Economist at IFS, said:
‘Young adults have been especially likely to be furloughed during the crisis, though relatively few have completely lost their job. Many have responded to this by staying or moving back in with their parents – providing temporary protection for their living standards. But we know that shocks early on in people’s careers can have negative effects on their future job prospects. Without effective support, there is a risk that young people today will bear the scars of the recession for years to come.’
It is no surprise, they say,that young people report being more pessimistic about their immediate financial future than other age groups.
The report found that the share of young adults aged 19–24 who are not working any hours per week (including those who are furloughed) rose by 25%, or around 400,000 people, from 2019Q4 to 2021Q1 – much more than changes seen for older age groups.
The vast majority of those jobs have, thus far, been saved by the furlough scheme, with only 50,000 additional 19- to 24-year-olds without any job at all in early 2021 compared with pre-pandemic. But this leaves the group especially vulnerable as the furlough scheme is wound down.
Unlike for older workers, earnings growth among younger employees (aged 19–34) who have continued to work has been lower than prior to the pandemic. This may not have large immediate consequences, but if this ground is not regained then the longer-term effects on their incomes will be significant.
