Young people are losing jobs faster than adults, but targeted policies can help them re-engage with the labor market.
The COVID-19 pandemic is set to have significant ‘scarring effects’ on the life chances of young people. They are being hit harder than adults in the massive disruption to labor markets caused by lockdowns, quarantines and the steep drop in economic activity. In addition, their vulnerable position in making the difficult school-to-work transition, and their short-term engagement in the world of work means that they may also bear higher longer-term economic and social costs.
They are suffering a double impact from both layoffs and work-hour reductions on the labor demand side and disruptions to education and training on the supply side. The COVID-19 crisis risks creating a “lockdown generation”.
Our research, in partnership with the International Labour Organization, found that people aged 15 to 24 – defined by the United Nations as youth - are losing jobs at a faster rate than those over the age of 25 during the pandemic. Youth are more likely than adults to experience outright job loss than job suspension or reductions in working hours.
A higher share of youth (47%) than adults (39%) are employed in the four sectors most adversely affected by the pandemic-induced collapse in economic activity – wholesale and retail trade, manufacturing, real estate and business activities, and accommodation and food services.
Even before the crisis, youth faced major challenges in the labor market. A majority (84%) were engaged in unsecure informal work without access to social protection. COVID-19 is exacerbating entrenched vulnerabilities. In particular, young women are overrepresented in three of the four most adversely affected sectors, particularly accommodation and food services. Their precarious position in the labor market is heightened by an increase in their (already high) share of unpaid household and care work due to business and school closures.
We estimate youth job losses of between 9.9 million and 14.8 million (full-time equivalents) across 13 Asia Pacific economies in 2020. The lower and upper bounds of the estimate depend on whether containment measures for all countries are in place for 3 or 6 months. The youth unemployment rate is expected to rise in all 13 economies compared with 2019. The rate could rise in Thailand to 16.4%, and in Viet Nam to 10.8%, under a 3-month containment scenario. Under a 6-month scenario, the rate in Indonesia could rise from 17.0% to 25.5%, and in India from 23.3% to 32.5%.
Tackling the youth employment crisis is critical to an inclusive and sustainable recovery after the pandemic. For governments facing competing priorities in the allocation of scarce resources, an important consideration is how to balance the inclusion of youth in wider labor market and economic recovery measures, and specific youth-targeted interventions.
A key strategy to stimulate youth employment is to revive aggregate demand. Given the large share of young workers in sectors most adversely impacted by the pandemic, a priority to reach at-risk youth is to direct economic stimulus and enterprise support to those sectors.
Active labor market policies for youth, as outlined below, are particularly relevant in a crisis context. Focus must be on reaching the most vulnerable youth, including the poor and marginalized women, and meaningfully engaging young people in policy development through social dialogue.
The COVID-19 crisis risks creating a “lockdown generation”.
An efficient approach can be to expand existing youth employment support programs. For example, in Indonesia a new training scheme, the Pre-employment Card program (Kartu Pra-Kerja), was rolled out just before the onset of the pandemic which includes targeting two million youth. The program was adapted for COVID-19 to prioritize laid-off workers, informal workers, and micro and small business owners across heavily impacted tourist regions.
To support young people during the pandemic, governments should consider the following actions:
Wage subsidies. Employers can be provided with a subsidy to avoid layoffs and retain young workers during the pandemic. Malaysia announced financial incentives for employers to hire and train 300,000 unemployed people. This includes providing monthly payments to employers for apprenticeships for graduates of secondary and tertiary education for up to six months.
Job creation. Governments can stimulate demand for young workers by creating targeted employment opportunities that also maintain young people’s work readiness. The Republic of Korea aims to provide jobs for more than 550,000 young people and low-income earners, including 50,000 high-tech jobs for young people in content development, big data management and other areas. As well, 50,000 internships will be created.
Job search assistance. Time-bound social assistance for young jobseekers can be combined with supporting access to relevant information about labour market opportunities. Australia included young jobseekers, apprentices and students in its COVID-19 income support measures. Recipients of the existing Youth Allowance are also eligible for additional support to help mitigate the employment effects of the pandemic.
Training, reskilling and upskilling. Training can be provided to young people to help them enter or re-enter the workforce. Malaysia created a fund dedicated to reskilling and upskilling 200,000 youth and unemployed workers to enhance employability. The package also supports student loan deferments and provides a one-time payment to post-secondary students.
Finally, investing in youth entrepreneurship should be part of the policy response package. During past economic shocks, the number of young self-employed workers spiked, so it is critical that self-employment become a space for productivity and self-fulfilment. Many young entrepreneurs in the region are showing resilience and creativity and are managing to innovate in response to the crisis, across diverse sectors such as agriculture, mental health, and logistics.
The public and private sectors, civil society and youth themselves must work together to protect young people’s jobs through the crisis. Beyond the crisis, a new future of work can be shaped where young people play their part in growth areas such as the green and digital economies and new flexible but secured forms of employment.