Graduates entering the labour market this year will likely be hit hardest by a recession linked to coronavirus mitigation measures.
According to the Institute for Fiscal Studies (IFS), young people graduating this year will be less likely to find work.
They will also find it harder to find well-paid employment than their immediate predecessors and, if the economy struggles to recover quickly, they may earn less than expected for a prolonged period of time.
Paul Johnson, director of the IFS, said: “Young people in work are suffering more than others as a result of the economic consequences of the lockdown and those still at school will see their education interrupted.
“Previous experience suggests that university graduates will start off in lower paying jobs than otherwise and will suffer ‘scarring’ effects such that they will be more likely to be unemployed several years after graduating.
“It will take several years before their earnings catch up with what they otherwise would have been.”
The IFS said that the labour market this year is likely to be “substantially more difficult” than it was after the 2008 global financial crisis.
It also noted that a “remarkable concentration” of young people are more likely to work in sectors affected by the shutdown.
It will take several years before their earnings catch up with what they otherwise would have been
– Paul Johnson
According to a survey by Bright Network, two-thirds of graduate students looking for jobs have already had grad schemes cancelled or put on hold as a result of the Covid-19 pandemic.
However, Mr Johnson dismissed calls to reduce outstanding student loan debt, describing it as “misplaced” because these payments are set by income level.
He said: “Forgiving parts of the loans will only benefit those graduates who in any case do very well in the labour market.”
A recent report by the University of Warwick has argued that young people between the ages of 20-30, who do not live with their parents, should be released from the lockdown.
Young people are less likely to develop severe symptoms of Covid-19, but will likely be hardest hit by the economic measures designed to slow the spread of the virus.
According to Andrew Oswald, professor of economics and behavioural science at Warwick: “The rationale for the lockdown is to save lives in the short to medium term.
“However, severe damage is being done to the economy, future incomes, unemployment rates, levels of national debt, and the freedoms we enjoy as a modern society.
“Before long, some balance will have to be struck,” he added.