We’re all in this together. Or are we? It’s hard not to notice that, although the virus itself may target the older population, its effects on our society and economy seem particularly harsh on young people.
Education has been disrupted at all levels, and there are worries about permanent damage to learning and opportunity. And already, think tanks are warning that the economic fall-out is not evenly distributed.
As unemployment is bound to shoot up, younger workers are most vulnerable. But how – and why?
Why young people have been hit hard
Younger workers are nearly two-and-a-half times more likely to work in a shutdown sector (notably leisure and hospitality) than older workers, according to the Institute for Fiscal Studies.
It did note that younger poorer workers tend to live with parents or other family, so might at least have a financial cushion in the short-term.
But for those who have managed to move out into a place of their own, they will be renting, and at risk of going into arrears with their finances under pressure.
It’s also the young who are less likely to be able to work from home. One Oxford University study found that only one in three of those earning less than £20,000 switched to some form of home working when the crisis began in late March – while almost three-quarters of those on more than £40,000 were able to home work.
The IFS also warned that for those who were in a job and now find themselves out of one, periods of unemployment when you’re young can have long-term effects.
For those on the threshold, hoping to start work in the autumn, it’s a sad truth that the school or uni classes of 2020 have drawn the truly short straw.
But we also must remember that for so-called millennials, this new crisis has hit us just as were starting to recover from the last one.
Deja vu?
The previous recession arrived in 2008 just as many millennials were leaving school, graduating from university and/ or starting in the world of work.
Suddenly, getting a stable job that paid enough to meet basic living and housing costs became difficult, if not impossible. Our generation would spend the next decade or so trying (and often failing) to keep our heads above water amid the tightest squeeze on wages and living standards in modern times.
Austerity cuts to public expenditure between 2010 and 2015 fell hard on the young, with working-age benefits capped and frozen, yet housing costs continued to rise.
And now it’s young workers who will be picking up the tab for longest when the bills for the massive Corona bail-out must be paid in the form of taxes.
When the polling people Ipsos MORI asked people in 2017 whether they would have preferred to have grown up at the time their parents did, a massive majority of older ‘baby-boomers’ said no, and a smaller majority of younger ‘Gen Xers’ said no.
But among the millennials, views were evenly divided, with just as many wishing they had grown up in the previous decades rather than now.
That’s a bit sad, but it is rational. My generation is broadly speaking the first to be growing up poorer than our parents. And that survey was conducted in 2017 – what would it show now, I wonder?
Causes for hope
There seem to be few bright spots for young people to cling onto – but they do exist. Firstly, borrowing costs should remain low while the entire world economy (it seems) tries to get back on its feet. That should mean the UK government will invest rather than cut its way out of this crisis.
Indeed, the early signs in this regard are promising. The International Monetary Fund has warned against future austerity and emphasised the need for greater spending to kickstart economies.
Boris Johnson’s previous ‘levelling-up’ agenda to boost under-resourced regions like the North of England could well be combined with big investment into sectors like science, potentially bringing training/job opportunities for younger people while delaying costly tax rises for the foreseeable future.
Furthermore, the debate seems to be shifting towards cutting expensive benefits for older members of the population, rather than shifting the post-corona bill onto younger shoulders.
For starters, the state pension is currently protected by a triple lock, which means it should rise by the annual rate of price inflation, earnings growth or 2.5% – whichever is the highest. Critics of this policy, introduced by the coalition government of 2010 – 2015, believe it is unfair, given that retired households have been enjoy higher incomes than workers, have seen the value of their assets rise and are more likely to have generous ‘final salary’ pensions.
Think tanks like the Social Market Foundation believe the 2.5% promise should be removed to save £4bn a year. Others believe free universal benefits for the elderly, like the TV license and bus passes, should be means-tested.
Whichever way the debate goes, there are many more champions for ‘intergenerational fairness’ than there used to be, including high-profile MPs. This will help to balance the public conversation around taxes and spending so it doesn’t exclusively favour the elderly – to the detriment of the young – just because they tend to vote more.
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Let’s hope for the best. The Covid-19 pandemic has rendered several people unemployed. Let’s see what the future beholds.