People in their 20s will be financially worse off than their parents

People in their 20s will be financially worse off than their parents

A study by the Economic and Social Research Institute (ESRI), published today, shows the disproportionate impact of the pandemic on younger workers.

Younger workers have been hardest hit by the Covid-19 pandemic, with a new report showing that a section of the labour market that never fully recovered from the economic crash has now been hit all over again.

The study by the Economic and Social Research Institute (ESRI), published today, shows the disproportionate impact of the pandemic on them.

It shows a collapse in the employment rate among workers aged 15 to 34 in the second quarter of last year, before recovering slightly and then falling again towards the end of 2020.

The report, funded by the Community Foundation for Ireland, shows there were 112,000 fewer 15-34-year-olds in paid work in the final quarter of 2020 than a year earlier, compared to 93,000 fewer workers aged 35 and over.

Employment rates fell by almost 60% for those aged 15-19 and 50% for those aged 20-24 respectively in the second quarter of 2020, compared to 25% for those aged 25-29 and 55 and over, and 20% for other age groups.

Proportionally, employment was 14% below its pre-pandemic level for those aged 15-34 compared to just 6% below for those age 35 and above.

Referring to this "intergenerational inequality", the report said part of the reason was that younger people are more likely to work in retail, hospitality, arts or leisure — sectors which have been most heavily affected by the public health measures necessary to suppress Covid-19. Young workers are significantly less likely to have previously worked from home and had less scope to do so.

Earnings stagnated

Young people also faced other difficulties, with earnings that have "stagnated" in recent years, meaning those in their twenties now are earning less than people in that age group in the 90s or the 2000s.

The research also finds that a growing share of young adults is facing high housing costs relative to their incomes, and high rents.

The research also found that a growing share of young adults is facing high housing costs relative to their incomes, and high rents.
The research also found that a growing share of young adults is facing high housing costs relative to their incomes, and high rents.

"This is in part because homeownership rates for young adults have collapsed, from 61% at age 30 for those born in the 1960s to just 32% for those born in the 1980s," the report said. 

"As a result, increasing numbers of young adults are exposed to the private rental market where long-standing affordability issues have been exacerbated by rapidly rising rents."

As for those ‘not in employment, education or training' (NEET), the report for those aged 20-24, that rate "remained stubbornly above its pre-crisis rate at 13% on the eve of the pandemic".

Concern

The report warned: "Such high and sustained levels of economic inactivity should be of concern to policymakers, not just for the cost they represent in terms of un(der)utilised labour but also the potential ‘scarring’ effect they may have on young adults entering the labour market."

As for the housing and rental situation, it said: "The combined effect of these developments is to cast a pall over the prospects of young adults and should be a cause of serious concern for society at large."

The findings form part of a larger report titled “Poverty, Income Inequality and Living Standards in Ireland” which will be published this Friday.

Dr Barra Roantree, report co-author and ESRI economist, said: "While the most serious medical impacts of Covid have been on older people, it is clear that the greatest impact in the labour market is being felt by younger workers.

“To minimise the potential ‘scarring’ effect on young adults, policymakers should ramp up capacity on high-quality training programmes in the months ahead. Policies that act to tackle the root causes of high rents will also disproportionately benefit younger adults who risk otherwise being left behind.”

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