COVID-19: mitigating the effect on younger generations
4 June 2020: As we face a steep economic downturn, how can we mitigate the effects of the current crisis on younger generations who tend to shoulder a heavier burden when it comes to recession?
The pandemic, the subsequent lockdown and the consequential recession have and will continue to affect the lives of the entire population. However, different generations have experienced COVID-19 differently.
With widespread furlough, the closure of schools and the higher vulnerability of the older generations, there are many questions around how to manage the cross-generational impact of the virus. Megan Fitzpatrick, Business Engagement Executive at ICAEW, considers how pandemic will affect one of the more economically vulnerable groups in society: the young.
After the 2008 crisis, the scarring on the careers of those just entering the labour market was profound: lower wages and higher unemployment lasted for at least seven years. This was not a one-off, as research into past economic crises has indicated that younger generations tend to shoulder a heavier burden when it comes to recession, and carry this far into their working lives. As we now face a steep economic downturn, we must ask ourselves how we can mitigate the effects of the current crisis on this group in the immediate, medium and longer-term.
ICAEW’s Intergenerational Fairness Report published in 2017 outlined key considerations for policymakers when approaching generational differences. The report identified that high youth unemployment was one of the three main challenges for governments in the coming years, and also flagged the disproportionate effect of crises on this issue.
Already in the current coronavirus-driven crisis, we have seen a high number of junior staff lose their jobs or be put on furlough. The dependence of the younger generation on the Job Retention Scheme is particularly concerning as we look towards the possible end of furlough in October.
One of the detrimental consequences of the ’08 recession was undoubtedly the widespread freeze on recruitment, both for individuals’ job prospects and organisations’ talent pipeline.
While some employers are likely to reduce recruitment in 2020, ICAEW’s Senior Business Development Manager Jonathan Worrell believes that many have learned from the 2008 financial crisis, where slashed recruitment led to skills shortages later on. “Generation Z, with its digital mindset and entrepreneurial approach, have a lot to contribute to the future success of our businesses, professions and economies,” commented Worrell.
With fewer jobs and more people entering the labour market, competition for employment will intensify, while those who can plug skills gaps will still be in demand. As organisations adapt to new ways of working and embrace digital technologies, new talent may be key to a successful adjustment.
Ways of working
As we consider what the future of work may look like, it is becoming widely accepted that we will continue to work remotely more than in our pre-COVID-19 lives. With varying levels of digital experience, there will be opportunities within workforces for more intergenerational learning and reverse mentoring.
Over the last three months, many organisations have adapted smoothly to working from home. While this may bring benefits, both environmentally and for company productivity, the thought of remote working as the new normal concerns many young professionals.
The lack of workplace socialising and learning through exposure, combined with fewer networking opportunities in a remote workplace, means that business has its work cut out providing young talent with the same opportunities to learn and network as their predecessors.
John Gaskell, ICAEW’s Head of Personal Finance Planning, also commented that the crisis has “stress-tested our infrastructure, and arguably also exposed challenges with the so-called gig economy”.
In the ONS’ 2019 Quarterly Labour Force Survey, 18 to 29-year-olds were identified as the lowest-paid group of workers and this was partially attributed to the high number of young people being employed in atypical work. The vulnerability of precarious workers has been intensified by the crisis and this raises questions over how gig workers should be supported.
Public spending during the pandemic has reached levels previously unseen during peacetime, and the trade-off between raising taxes and stimulating economic growth is one with which governments all over the world are grappling.
Alison Ring, ICAEW’s Public Sector Director, commented that borrowing is an extremely useful tool when used sensibly.
“Yes, risks need to be understood and managed, but taking on debt can be very positive if it allows you to do more and supports higher levels of prosperity,” said Ring. “In current circumstances, more spending is really necessary if the economy is to survive and we must accept that the legacy of the pandemic will be greater debt.
‘The key question to ask is if debt is being taken on, will it help create opportunity and long-term sustainable growth for younger generations?’
More information for young members of ICAEW can be found here.