Young adults will bear scars of recession for years says research

YOUNG ADULTS have been well protected from increased hardship through the pandemic, but there is a risk that many will bear scars of the recession for years to come, according to new research by the Institute for Fiscal Studies, funded by the Joseph Rowntree Foundation.

The study said that the careers of young adults have been heavily disrupted by the pandemic. However, so far there has been little sign of increases in deprivation among this group.

The IFS said 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.

Young workers are more likely than older workers to be furloughed. However furlough support is being wound down and the IFS said living with parents is often not a sustainable or desirable long term option.

Researchers said it is no surprise that young people are more pessimistic about their immediate financial future than other age groups.

The percentage of young adults, aged 19 to 24, who are not working at all (including those who are furloughed) rose 25 per cent (400,000 people) from the fourth quarter of 2019 to the first quarter of 2021 – much more than changes seen for older age groups.

The vast majority of these jobs have been saved by the furlough scheme, with only 50,000 additional 19 to 24-year-olds without any job at all in early 2021. However, this leaves the group especially vulnerable as the furlough scheme is wound down.

Xiaowei Xu, 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.”