Young adults may face future hardship from the pandemic despite being protected now, report says

With the furlough scheme beginning to wind down, young people are at risk of falling through the cracks in the medium- to long-term future

New research looks at the effects of the labour market during the pandemic (Getty Images)

While young adults are currently well-protected from hardship during the pandemic, they may feel the effects of the recession in years to come, a report has found.

New research published today by the Institute for Fiscal Studies (IFS) and funded by the Joseph Rowntree Foundation (JRF) looks at the effects of the labour market during the pandemic.

The research is from a chapter of the 2021 edition of the annual Living Standards, Inequality and Poverty in the UK report by the IFS.

It found that despite disruption to young people’s careers, there has been little sign of increases in deprivation among the 19 to 24 age group.

While the number of people aged 19 to 24 who are not working any hours per week, including those on furlough, increased on a significantly larger scale (25 per cent) than older age groups between the fourth quarter of 2019 and the first quarter of 2021, the majority of young people are currently protected by the furlough scheme.

Only 50,000 of the 400,000 19- to 24-year-olds who became unemployed during the pandemic are without any job at all.

Additionally, the report found that there were fewer young adults who reported using a food bank in early 2021 (1 per cent) than there was pre-pandemic (6 per cent), and changes in measures of deprivation for 19- to 24-year-olds have been similar to, or on some measures better than, those for older adults.

For example, the rise in the number of 19- to 24-year-olds living in a household where nobody is working (1 per cent) is lower than for those aged 24 to 64 (2 per cent).

However, young people may feel the financial impact of the pandemic in years to come, the report said.

With support from the furlough scheme beginning to wind down and the government now contributing only 70 per cent to furloughed employees’ wages, dropping again to 60 per cent in August, young people, who are significantly more likely than older age groups to have been put on the furlough scheme, are at risk of falling through the cracks.

These cracks have been temporarily papered over by the scheme and the option for some to live with their parents, the report said.

Excluding full-time students, the share of 19- to 24-year-olds who live with their parents has increased from 45 per cent to 50 per cent which, the report says, “highlights the support that many parents are able to provide to their adult children to help them through this difficult period.”

However, it says, this is not a sustainable nor desirable long-term option for many young people.

Xiaowei Xu, an author of the report and a senior research economist at IFS, says: “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.”