Lockdowns and recession will blight careers of graduates, warns IFS

‘High levels of vacancies are starting to cool, especially in the private sector’

COVID lockdowns and a looming recession have left more than a million graduates and school leavers facing the worst job prospects since the financial crisis, a new report has warned.

The Institute for Fiscal Studies (IFS) said people leaving school and university this year and next face a “double whammy” of disrupted education and recession.

The combination means people joining the job market this year will do so with less education and work experience than past cohorts, and with fewer job prospects.

The think tank said there was evidence that the pandemic had left pupils behind on reading.

Other studies show people who start looking for a job for the first time during a recession face “persistent negative effects on employment and earnings” that mount over a lifetime.

“There are people who will have suffered an incredibly unfortunate double whammy, with severe disruption during a key phase of their education due to the pandemic, followed by an economy in recession upon completion of their education and entry into the labour market,” the IFS said in a report.

It noted that someone who started a three-year university course in 2020 “would have done the first half of their degree online, with few internship opportunities, and will enter a labour market in recession with less academic and work experience”. Someone born in 2005 “would have spent the last three years of secondary school in the pandemic, accumulating learning losses, and could leave education in 2023 in the middle of a recession”.

The pandemic and lockdowns have already led to a widespread deterioration in mental health, with young people suffering the most, according to research conducted by the Office for National Statistics.

However, while young people entering the jobs market face disadvantages that could build up over a lifetime, the IFS said the surprising strength of the jobs market meant many recent graduates were in fact able to secure jobs.

A “boom in job vacancies” post-pandemic meant there were “no persistent negative effects on employment rates or job quality for cohorts that graduated during or just before the pandemic”.

This is in stark contrast to the 2008 global financial crisis, when mass job losses meant new graduates saw lower employment rates, slower career progression and lower pay.

However, the IFS warned that the looming economic downturn meant that those currently in education were unlikely to enjoy the same fortunes as those who left education just before the pandemic hit.

It added that “strained public finances” meant government support for retraining was “likely to be sparse”.

“High levels of vacancies – which boosted career prospects for the Covid19 cohorts – are starting to cool, especially in the private sector,” the IFS said.

“Given forecasts of a prolonged recession, it seems as though the labour market that the next few cohorts of graduates will enter will look more like the one faced by post-2008 cohorts than that faced by the Covid-19 cohorts,” it added.

Xiaowei Xu, an economist at the IFS, said that while it was too early to predict how the jobs market will evolve this year, the possibility of young people’s jobs prospects being stifled would carry enormous costs over their lifetimes.

“If we do see the labour market starting to cool during this recession, plus the added effect of people having missed out on learning as a result of Covid disruptions to schooling, that could really affect the career prospects of these new generations for several years to come.”