Rising unemployment is taking a huge toll on young people, even as firms are learning to live with lockdown

Firms are learning to live with lockdown restrictions, with payrolled employment actually increasing by 83,000 in January, but the crisis is taking its toll as young workers, who should be a priority for Government support, the Resolution Foundation said (today) in response to the latest labour market statistics.

The Job Retention Scheme (JRS), currently estimated to be supporting around 4.5 million employees, has helped cushion job losses. However, this support – and firms’ ability to adapt to lockdown restrictions – has not prevented the sheer longevity of the crisis causing the labour market to deteriorate, with unemployment climbing to 5.1 per cent by the end of 2020. The redundancy rate also rose to record levels in the autumn, though it has fallen back sharply in recent weeks.

Today’s data also highlights the extent to which young people have borne the brunt of the crisis, with workers aged 24 and under accounting for almost three-fifths of the 726,000 fall in payrolled employment since the crisis began.

The importance of the JRS in holding back job losses, coupled with the scale of the crisis facing young people, should be at the forefront of the Chancellor’s mind when he delivers his Budget next week, says the Foundation.

As well as extending the JRS into the Summer, the Chancellor should announce targeted support in the form of business grants and wage subsidies to hard-hit sectors of the economy, such as hospitality and leisure that are key employers for young people.

Nye Cominetti, Senior Economist at the Resolution Foundation, said:

“Unemployment continued to rise at the end of 2020. However, the renewed lockdown in January has had only a muted effect on employment, as firms have adapted and the furlough scheme has kept people in their jobs.

“But the sheer longevity of the crisis is taking its toll on firms, and young people in particular who have borne the brunt of jobs losses.

“The Chancellor will need to address in next week’s Budget by both extending emergency support to firms while restrictions are still with us, and announcing fresh stimulus to power Britain’s economic recovery.”