Generation Paused: Young brace for long-term economic impact of pandemic

It’s too early to assess the scale of the economic effects of Covid-19 on Ireland’s under-25s — but current levels of joblessness and lack of opportunities for young people may be an early indication that its impact will be deep and long-lasting, writes Maresa Fagan
Generation Paused: Young brace for long-term economic impact of pandemic

Monthly unemployment data from the Central Statistics Office reveal that jobless rates are three times higher in under 25s, with more young women out of work than their male peers, bucking traditional trends.

The true scale of the economic impacts of the Covid pandemic on youth unemployment is not yet clear but a higher jobless rate in under 25s will require careful monitoring as the country moves towards a full reopening of the economy.

In the first of a two-day series of features, the Irish Examiner takes a look at the hard data and speaks to those keeping track of youth unemployment levels.

Monthly unemployment data from the Central Statistics Office (CSO) reveal that jobless rates are three times higher in under 25s, with more young women out of work than their male peers, bucking traditional trends.

The higher jobless rate among 15 to 24-year-olds has led to calls for the Government to do more.

During the 2007 economic collapse, the number of under 25s claiming welfare supports reached around 100,000.

Since Covid took hold in March last year, tens of thousands of young people have been recorded as unemployed or in receipt of the pandemic unemployment payment (PUP) or technically out of work, although numbers are declining month by month as the country reopens on a phased basis.

There are some concerns that the full extent of the Covid economic shock may not become evident until the PUP is fully phased out.

At the same time, the fact that many students, who work part-time, are included in the PUP numbers, may overestimate the potential scale of any unfolding youth unemployment crisis.

The Department of Social Protection confirmed that as of 22 June an estimated 27,000 PUP recipients were students, with the vast majority under 25.

“The under 25 age cohort of PUP recipients has seen the largest decrease in recent weeks with some 8,000 under 25s closing their PUP claim in the past fortnight alone”, a spokesperson for the Department said, adding that PUP claims for students have been extended until the start of the 2021/2022 academic year.

While the Live Register is not used to quantify unemployment, as it includes casual and part-time workers, county data provide some indication of jobless blackspots and where more people are signing on.

Live Register data from the week of 27 June suggests that youth unemployment is not confined to the large urban cities of Dublin and Cork, with high numbers of under 25s also signing on in rural counties, such as Donegal, Louth, Wexford, Limerick, Galway, and Tipperary.

The number of under 25s availing of PUP in late June was highest in counties Dublin, Cork, Galway, Kildare, Meath, Donegal, Limerick, Kerry, Mayo, and Louth, according to official data.

Other figures reveal that of more than 20,000 apprenticeships in the country, counties Donegal, Kerry, Laois, Offaly, Westmeath and Longford had the lowest number of places available.

The National Youth Council of Ireland said more investment, additional supports, and a taskforce on youth unemployment will be needed as the country emerges from Covid.

Researchers at the Economic and Social Research Institute say it is too early to quantify the Covid impact on long-term youth unemployment levels but that the picture will have to be closely monitored over the next six to twelve months.

The Department of Social Protection said an additional 150 Intreo employment case officers or job coaches are being recruited to meet the increased demand for activation and labour market support as a result of the pandemic.

The Government’s Economic Recovery Plan, launched in June, aims to have 2.5 million people in work by 2024.

What The Data Says

Jobless rates are three times higher in under 25s, with more young women out of work than their male peers, mainly because their employment sectors were harder hit by Covid restrictions over the past year.

An analysis of monthly unemployment data reveals that the traditional and Covid jobless rates are three times higher in those aged between 15-24 compared to those aged over 25.

Since the pandemic took hold in March 2020, the CSO has been monitoring traditional unemployment rates as well as Covid jobless rates, which include those in receipt of the Pandemic Unemployment Payment (PUP), who are technically considered as unemployed.

In June, the latest figures available, between 70,000-90,000 young people under 25 were recorded as unemployed or receiving PUP. The number was higher in the earlier stages of the pandemic and has been falling as the economy reopens.

The traditional monthly jobless rate for June 2021 was 20% for under 25s compared to 6.8% for over 25s.

If those on PUP are taken into account, the unemployment rate for under 25s rises to 44% compared to 15.5% for over 25s.

Monthly unemployment data from the Central Statistics Office reveal that jobless rates are three times higher in under 25s, with more young women out of work than their male peers, bucking traditional trends.
Monthly unemployment data from the Central Statistics Office reveal that jobless rates are three times higher in under 25s, with more young women out of work than their male peers, bucking traditional trends.

It is also worth noting that the Covid jobless rate includes thousands of students with part-time jobs, who were eligible for PUP but would not ordinarily receive social welfare support. This may skew the current youth unemployment picture, as most students will return or enter education rather than remaining out of work.

Monthly unemployment rates also reveal that young women under 25 now outnumber young men out of work, primarily because they work in sectors more impacted by Covid during lockdowns and ongoing restrictions.

In March 2020, at the outset of the pandemic, 11% of young women were out of work compared to almost 13% of young men.

Covid, however, has reversed that trend with 23% of young women unemployed in June 2021 compared to 17% of young men.

If the PUP is included, unemployment rates rise further for young women and men — 47% for women and 41.6% for men, although the traditional and Covid jobless rates for both are falling as the economy reopens.

Senior researcher with the Economic and Social Research Institute (ESRI), Elish Kelly, said the higher jobless rate among young women was likely to come down to the sector they worked in, with a higher proportion of young women working in the harder hit sectors such as hospitality and retail.

“Females were more exposed to the sectors that were more affected by Covid while young males were more concentrated in the construction sector and got back into work quicker,” she said.

Too early to say

It is too early to say if the impact of the Covid pandemic on the economy will lead to higher rates of long-term unemployment among young people.

That’s according to researchers at the Economic and Social Research Institute (ESRI), who have been examining the impact of the pandemic on the labour market and economy over the past year.

Earlier this year the ESRI published research showing that young adults were losing out because of the impact of the pandemic on the jobs market, the lingering effects of the 2007 financial crisis, and stagnant earnings.

ESRI economist Barra Roantree said the pandemic and public health measures had a greater impact on younger adults because of the sectors they work in: “Younger adults have been much more affected and that’s because of the types of sectors they work in — hospitality, arts, leisure, and retail”.

A key concern, he said, is the proportion of young people not in employment, education or training, which increased from 10% in 2007 to 25% at the height of the crash and remained at around 15% post-recession.

“The number of young people not in employment, education or training was around a third higher a few years after the recession and the danger is that we get something like that happening again,” he said.

“If the recovery isn’t as fast for younger adults as it might be for those who are working from home or already in a job, that’s one of the concerns,” he said.

The labour market, he said, hadn’t fully recovered since the last economic crisis and, adjusting for inflation, average weekly earnings for young adults were not much higher than for people born 30 years earlier.

“We have seen strong earnings growth over the past 20 to 30 years but it hasn’t risen by as much for younger adults,” he said.

The 1980s recession, which was marked by high unemployment and emigration, was followed by strong economic growth in the 90s and unless similar growth occurs there is likely to be “some degree of stagnation”, Mr Roantree said: “Younger adults aren’t going to see their incomes grow quite as fast as maybe their parents might have.” 

Other ESRI research has highlighted the need to remove the potential cliff edge linked to the PUP, which unlike the job seekers payment, does not allow recipients to work any hours.

Mr Roantree said the way PUP is currently structured will not encourage people to take up reduced hours in the event their employer partially reopens or opens on a phased basis and this will need to be looked at.

Fellow ESRI researcher Elish Kelly said it is too early to say whether the pandemic will lead to more young people becoming long-term unemployed or out of work for more than 12 months.

While we are 16 months into the pandemic and are now beginning to ease out of it, the next six-12 months will be key, she said: “There needs to be continual monitoring of the situation as the economy continues to open up to determine the impact on younger people”.

General long-term unemployment rates haven’t increased over the pandemic, she said, adding it was too early to quantify Covid impacts on long-term unemployment rates for young people.

The most recent ESRI economic commentary expects unemployment rates to continue falling as the country reopens.

If the country continues to ease out of Covid restrictions, the picture may become clearer by the year-end, she said: “By the end of the year we will hopefully have a better idea of the impact of Covid-19 on young people” 

The Department of Social Protection, Ms Kelly added, has started to engage with 10,000 PUP claimants on a weekly basis, prioritising full-time workers receiving the payment the longest, and also resumed job activation services, which should help to prevent more people becoming long-term unemployed.

The Government she said will have to ensure that training and education initiatives match the skills required by employers: “Any education and training supports to assist people to get back into the labour market must relate to the needs of the market. They must meet the needs of employers and growth areas where there are job openings and opportunities into the future”.

Ms Kelly also pointed out that the pandemic had a mixed effect on the economy, with the pharmaceutical and IT sectors thriving but retail and hospitality among those hardest hit by Covid over the past year and that the economic outlook was not as negative as it was in the 2007 recession.

While new Covid variants continue to create some uncertainty, the vaccination programme provided a certain amount of confidence that the country can move beyond Covid, she said.

Extra supports needed

Extra supports, more investment and a taskforce on youth unemployment will be needed to prevent a jobless crisis unfolding among the under 25s, the National Youth Council of Ireland has said.

Commenting on the latest data, showing significantly higher levels of unemployment among young people, head of research and policy at the youth council, Marie-Claire McAleer said this trend was evident prior to the pandemic.

There are an estimated 75,000 young people not in education, training, or employment and Ms McAleer said young people who were unemployed prior to March 2020, many of whom are now long-term unemployed, should not be forgotten.

Significant investment and a Taskforce on Youth Unemployment, she said, are needed to offer a tailored suite of education and training options and supports and prevent young people becoming long-term unemployed.

“We know from the evidence that the longer a young person is unemployed the harder it is for them to get back into employment. It also has a negative impact on their physical and mental wellbeing and on their career and employment prospects in later life,” Ms McAleer said.

“We must adequately resource youth work services and the formal education system to provide for all young people, especially the most vulnerable in society. Government have talked about a ‘New Deal for Young People’. We need to see evidence of that in the coming weeks and months,” she said.

While welcoming a new five-year action plan for apprenticeships, which could target underrepresented groups such as young women, people with disabilities, Travellers and other minority ethnic groups, the youth council said more education and training places will be needed to avoid young people falling off a cliff when the PUP ceases.

“We remain concerned that there aren’t enough education, training, and work experience places available to young people. If the Government begins to phase out the PUP, then we need to provide young people with alternatives and avoid a cliff edge and income shock for young people who lost their jobs because of the pandemic,” Ms McAleer said.

The pandemic, she said, had a negative impact on the mental health and wellbeing of young people and had created feelings of uncertainty around access to education and concerns for the future.

Unlike the last recession, which saw hoards of young people emigrate in search of work opportunities, there is no emigration valve at present.

“This time around youth emigration, in the short to medium term, is unlikely to provide an escape route for those unable to secure employment or trapped in precarious employment situations,” McAleer said.

Stephanie Regan, a psychotherapist involved in a Psychotherapy Off the Couch podcast series that touches on aspects of the pandemic, said Covid was taking its toll on many young people who found themselves out of work and facing an uncertain future.

“I have noticed an increase and intensity in the number of young people and their parents making contact for advice both during the pandemic and now as we head out of lockdown,” she said.

Where young people previously spoke of loneliness and isolation, a lack of job opportunities and the future were now featuring more strongly.

“Problems and issues can run deep. Often, there is no let up, and when issues such as a lack of job opportunities or money in the pocket comes up, it can compound the issues for an already stressed young adult. These mental strains can manifest themselves in depression, an eating disorder, anxiety or other,” Ms Regan said.

More Apprentices

More apprenticeships are needed for young people living in rural counties such as Donegal and Kerry, which have the lowest number of apprenticeships in the country.

That’s according to recent figures furnished to Independent TD Thomas Pringle in response to a parliamentary question, which reveal significant variation in the number of apprenticeships offered by education and training boards (ETBs).

The majority of 20,221 apprenticeships are currently taken up by those aged under 25, although more than 5,000 are filled by over 25s.

While the range of apprentices available has widened, 62% relate to electrical, plumbing, motor mechanics, and cabinetmaking trades.

At the end of April, unsurprisingly the two main urban centres of Dublin (5,610) and Cork (2,433) had the highest number of apprenticeships.

At the other end of the scale, Donegal had the lowest number at 307 apprenticeships, accounting for just 1.5% of all places.

Just over 500 apprenticeships were available in other rural counties such as Kerry (520), while similarly low levels of apprenticeships were available in joint ETBs such as  Laois/ Offaly (518) and Westmeath/ Longford (514).

Mr Pringle said the range of apprenticeships on offer was very limited and more will be needed as the country emerges from the Covid pandemic.

“The number and range of apprenticeships available needs to be broadened out at a local level”, he said, adding that some work is also needed to show employers the value of apprenticeships.

There was anecdotal evidence, he said, that some employers do not see the value in training someone who may leave to work for someone else or become a potential competitor.

“Some employers might see an apprenticeship as a cost rather than a benefit to them. Some work has to be done on that. We need to look at what would make employers more willing to offer apprenticeships,” the Donegal TD said.

While the emigration option is not available at present, Mr Pringle believes there is an opportunity to entice young people to stay at home if more apprenticeships and other training initiatives are made available.

“It has halted at the moment but I’d say it is only delayed and as things open up people will go unless we do something to make it attractive for people to stay,” he said.

“Having more and a wider range of apprenticeships would ensure that young people could stay and make a life for themselves in Donegal,” he said.

“Rather than just throwing money at this, the Government needs to support a mindset change,” the Independent TD said.

In April the government launched a five-year Apprenticeship Action Plan that hopes to deliver 10,000 new apprentice registrations per year by 2025.

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