Economic fallout could steal employment prospects and a successful transition to adulthood without a child- and youth-focused government response.
How will today’s 15-year-olds remember 2020? What about the years just following the pandemic that uprooted their lives? Young people may not be hit directly by COVID-19, but they are the generation that will live the longest in the pandemic’s wake. Massive societal disruptions often come with a long “tail,” the effects of which can linger for years or even decades. Children and youth are particularly prone to such effects.
The severity of the pandemic’s aftermath is unknown, but predictions are already concerning for young people. Early analysis from the OECD suggests school closures will cost students in grades 1 through 12 up to 3 percent of their expected lifelong earnings. Such losses could lead to an average of 1.5 percent lower annual GDP for the remainder of the century. Bank of Canada Governor Tiff Macklem recently highlighted the risk of “uneven recessions” for women, youth and low-wage workers for Canada’s long-term economic recovery. All of this before we know the pandemic’s full impact.
One key indicator of the impact is the NEET rate: the percentage of young people ages 15-19 who are “Not in Employment, Education or Training.”
Many millennials in Canada weathered the global financial crisis of 2007-08 at a critical juncture of their transition from childhood to adulthood. That economic crisis stole education and work opportunities from young people ages 15-19, as the NEET rate rose to 10 percent. In the following decade, the NEET rate rebounded to 5.9 percent just before the pandemic hit. Nevertheless, the unemployment gap between youth and older Canadians has become one of the most prolonged hangovers from 2008.
Thousands of young people across Canada will leave school this year. Many will graduate from high school or post-secondary school, while others will choose not to return after a lengthy disruption. Young people hoping to enter the labour market will face a grim outlook. Without an urgent action plan, the crisis could steal their prospects for employment and prevent a successful transition to adulthood, particularly for those already falling behind. Even those who succeed in starting their careers may never catch up in pay, opportunities and confidence.
A labour market that excludes youth
Even before COVID, young people disproportionately faced difficulties in finding employment. The changes in labour market dynamics due to the pandemic will affect young people in three ways:
1) a reduction in earnings and employment due to the current wave of job losses;
2) the emergence of greater obstacles to finding work, entering the labour market and trying to transition to better jobs; and
3) disruption to education and training, especially for those who struggle to afford it, which could reduce potential employment opportunities and earnings in the future.
The pandemic has had a devastating impact on the world’s economies, with global growth projected at minus-4.9 percent in 2020, making it the worst recession since the Great Depression, and far worse than the global financial crisis. This has severe implications for the labour market. Over the summer, when young people typically work to get by, get training or save for further education, the International Labour Organization (ILO) estimates a decline in global working hours of 14 percent in the second quarter of 2020, which is equivalent to 400 million full-time jobs (figure 1).
Compared to adults, youth have been harder hit by the labour market’s shifts during the pandemic, losing jobs or hours (figure 2). Young women are disproportionately affected – in Canada, the youth unemployment rate between February and April 2020 increased by 14.3 percentage points for males and 20.4 percentage points for females.
Past recessions demonstrate that youth unemployment not only increases significantly at the beginning of economic crises, but that it remains high long after the recovery. Entering the labour market during a recession can shape young people’s outcomes for a decade or more.
Job vacancies have collapsed since the start of the pandemic (figure 3). New labour market entrants will be among the hardest hit. Sectors most affected by the pandemic, including services, employ a large proportion of the youth workforce, especially young women. The lack of job vacancies has long-term consequences as it risks creating more discouraged young people who give up on their job searches.
Disruptions to education, training, and well-being
Meanwhile, the pandemic-induced recession has disrupted skills development and further educational opportunities for young people through the closures of schools, colleges and universities, technical and vocational education and training (TVET) institutions, as well as interruptions to apprenticeships and traineeships. Based on an ILO global survey, around half of young students report a likely delay in completing their current studies while 10 percent expect to be unable to complete them at all, with racial minorities and low-income students being disproportionately affected.
Economic crises also tend to erode trust in public institutions, including governments. Following the global financial crisis, less than half of the OECD population trusted their national governments, and this erosion of trust was particularly prominent among young people. Based on OECD data, in 2018, young people had the lowest level of trust in national governments, political leaders and elections compared with middle-aged and elderly citizens. It’s no surprise that young people – those too young to vote and those who can – are increasingly engaging in protests on various issues.
Furthermore, worry about the future takes a heavy toll on young people’s mental well-being. Young people in Canada say they have experienced heightened anxiety during the pandemic, stemming in good part from worry about their futures. One of their top hopes as they headed back to school last month? Support from their teachers to plan for the future.
Planning for a NEET Recovery
Based on the NEET rate – Not in Employment, Education or Training – and the long tail of economic disruptions, a child- and youth-focused government response is essential. The NEET rate is an indicator of our future economy’s health, and the financial and social costs associated with young people falling out of employment, education and training could be astronomical.
One policy solution to address this issue in Canada is the Youth Guarantee. The Youth Guarantee is a commitment of European Union member states to ensure that all young people under the age of 25 receive a quality offer of employment, education or training within four months of leaving a job or program. The policy has gained momentum across Europe and led to a two percent reduction in the NEET rate before the pandemic. Scotland and other countries are doubling down on the Youth Guarantee with more ambitious investments and targets. If Canada expects its young people to remain competitive in the post-pandemic economy, it should provide a guarantee of its own.
Moreover, Canada’s schools must reach out to the “missing” students who never returned to school – online or in the classroom. It’s critical to prioritize students’ well-being and help them reconnect to school. For those finishing educational programs, a policy like the Youth Guarantee could help them seamlessly transition into work or further education, and from their teenage years into adulthood. Such bold policies are crucial to reimagining a future that works for our youngest generation.
This article is part of the Tackling inequality as part of Canada’s post-pandemic recovery special feature.