Yahoo Finance Young workers hit hardest by lockdown legacy in threat to global growth
Young workers’ job prospects have been hit hardest by the pandemic and the legacy of Covid lockdowns, with dire consequences for the long-term future of the global economy, the International Labour Organisation has warned.
There are 19m fewer under-25s in work compared with 2019, the agency said.
Global youth unemployment – defined as those who are out of work but actively looking for employment – is still 6m above pre-Covid levels, though expected to fall to 73m this year from 75m in 2021.
Combined with lost education as a result of schools being closed through the pandemic, the findings mean today’s youngsters can expect to be less productive and less well-paid for years to come.
The young have suffered particularly badly as companies slashed new hiring when Covid struck, favouring older workers who were already in jobs. As a result, the hit to those starting their careers has been bigger than the blow dealt to those who were already in work.
“Young people were especially affected because firms that survived the crisis sought first and foremost to retain workers, while new recruitment collapsed,” the ILO said.
“In addition, young workers were less likely to have the seniority and types of contracts marking them out for retention by employers, and hence were more likely to lose their job. Moreover, government‑sponsored job retention schemes, where they existed, were less effective in protecting young workers.”
Rich countries are expected to soon get “close” to pre-pandemic levels of employment, but poorer countries could struggle for years to come.
The situation is particularly severe in parts of Eastern Europe and Central Asia due to Russia’s war in Ukraine and its painful economic fallout.
“The mass influx of refugees from Ukraine is creating further pressure for the labour market and social protection systems in neighbouring countries, while the deterioration of the Russian economy could exacerbate employment challenges in Central Asia,” the ILO said.
In the UK, disruption to training and education has contributed to a skills crisis.
The skills shortage is forcing bosses in afflicted industries to offer workers more pay. The ONS found that one-in-eight businesses raised wages in June, rising to almost one-quarter of companies in human health and social work, and in the hospitality industry.
However, just 1pc of businesses offered staff a cost of living payment in the last three months, in a sign the private sector is responding to higher inflation with higher bonuses.
Larger companies are more likely to have given a one-off payment, with one in every 20 of those with more than 250 staff offering an extra top up between May and July.
Smaller businesses were much less inclined to do so, with only 1pc of companies handing out additional cash.
The data is likely to calm fears that a 1970s-style wage-price spiral could take hold, in which workers demand more pay to cope with higher living costs, which in turn forces bosses to ramp up prices to cope with the extra costs.
Andrew Bailey, Governor of the Bank of England, has called for businesses to moderate their prices and told well-paid staff in particular to make only modest pay demands.
