There is growing evidence that economic consequences of the COVID-19 pandemic are particularly negative for young people. On the eve of the coronavirus outbreak, workers aged below 25 were more likely than other workers to be employed in sectors that have been effectively shut down as part of the UK lockdown and they are more likely to have lost their jobs since then. This note shows that the economic repercussions of the pandemic threaten to severely disrupt the career progression of young workers, which suggests negative economic impacts on this age group may last well beyond the easing of the lockdown.
- Over the last decade, young people starting out in the labour market have increasingly been working in occupations that are relatively low-paid. For example, people born in the 1980s are more likely than those born in the 1970s to start their careers in low-paying occupations such as customer service assistants and nursery workers, and less likely to start in mid-paying occupations such as jobs in metal manufacturing and secretarial work.
- As bad luck would have it, many of these low-paying occupations are in sectors hardest hit by the COVID-19 crisis: for example, hospitality and non-food retail. In 2007 around 19% of all people aged between 22 and 25 working in their first full-time job after leaving education were employed in sectors that were essentially shut down during lockdown, while by 2019 this had increased to 22%. By contrast, the share of all employees working in shut-down sectors had fallen slightly from 17% in 2007 to 16% in 2019.
- The growing importance of those ‘lockdown sectors’ as employers of workers at the start of their careers is primarily due to an expansion of the accommodation and food industry. The share of workers starting their careers in this sector increased by about 50%, from 6% to 9%, between 2007 and 2019.
- As other sources of wage growth have dried up, young workers have become increasingly reliant on moving into higher-paying occupations as a source of early-career wage growth. Around 28% of wage growth over the first five years of the careers of workers born in the 1970s could be attributed to moving into a higher-paying occupation. This had risen to around 50% among men born in the 1980s and women born between 1980 and 1984, and to 60% among women born between 1985 and 1989.
- The COVID-19 pandemic has severely dented the career prospects of young people and threatens to have a prolonged negative economic impact on them as a result. Sharp contractions in shut-down sectors will make it harder for young people to take their first step onto the career ladder, while reduced job opportunities will make it harder for them to move into higher-paying occupations.