This pandemic has drawn lines in society dividing outcomes by age, health condition, geography and job types, none more so than the negative economic consequences of Covid-19 for young people as they lose out on education, jobs, career progression and pay.
Youth unemployment is currently around 13 per cent higher than pre-pandemic levels and, according to the Institute for Fiscal Studies (IFS), employees aged under 25 are two and a half times as likely to work in a sector that was shut down during the pandemic. As a result they are also more likely to have been furloughed.
This has created a perfect storm of financial woes for the younger generation. As the Resolution Foundation discovered, younger adults were the most likely to fall behind with housing payments, risk long-term unemployment and have ‘scarring’ effects on their prospects from starting careers in a downturn. The employment rate of this year’s graduates could be as much as 13 per cent lower than it would have been without the crisis, and the OBR predicts youth unemployment could reach the same levels as the peak of the early 1980s.
As the Chancellor delivered his Budget yesterday he made it clear the plight of our young people has not gone unnoticed. The Budget made significant provision: tripling the number of traineeships, and doubling the funding for each new apprenticeship from £1,500 to £3000, on top of the £2billion KickStart scheme to support 250,000 jobs announced last year.
The Conservative Party has turned around youth unemployment before, most recently after the financial crash of 2008. I was part of that team in the Department of Work and Pensions serving as both as Minister for Employment and Secretary Of State between 2012-2018 during which period the Government managed to turn the situation around and deliver record employment levels.
There won’t be a silver bullet. The Government will need to try a selection of schemes to see which works best in this post Covid environment. In 2012, we developed a youth guarantee scheme with a selection of offers of support, from financial to education and training. This was supplemented with work trials to see if the work relationships and environment worked for both the business and the employee. The latter proved the most successful as the tailored knowledge and a good working relationship cemented the job and further career progression.
Whilst the post Covid environment is different from the fallout of the financial crash, the end point is the same; we need to grow the economy and boost the number of jobs. There are tax levers to be used and stimulus packages to be delivered. The Chancellor, through the furlough, grants, loans, deferral of business rates, reduced VAT rates and sector specific schemes has helped to support jobs, businesses and families by an unprecedented £280 billion during the pandemic.
This Budget has continued much of that support until September but it has also introduced incentives to get business investing and growing, from setting up eight free ports across the country from Felixstowe to Liverpool with infrastructure support, simpler planning and tax breaks, new Growth Deals, a new super-deduction scheme for businesses to invest and Help to Grow schemes.
All of these will be needed to provide the right environment for businesses to grow and support jobs, and to grow confidence back in our economy and our workforce, and to have a vision for our country post Brexit and Covid. This is also vital as we aim to be a science centre building on our vaccine success, and a global tech centre, creating high skilled jobs now and for the future.
Most importantly, as the vaccine rollout continues at a pace, we need to open up our economy and move out of lockdown. It is only then that our economy can fully recover, and young people, affected most mentally and emotionally by the lockdown, can once again be able to flourish.
City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.