The hangover: Why young workers can’t shake off the recession
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All recessions hurt, but they hurt different groups differently. The young are often worst affected, whether by high youth unemployment, low starting salaries or painful pay squeezes. Ten years on from the financial crisis it’s time to take stock of how lasting the effect has been on those who entered the labour market during it. Do the effects of economic downturns stay with people for many years? How long does it take for their pay and employment levels to recover? Does it change the kind of jobs they do? And what can the financial crisis teach us about the effects of recessions for the next generation of workers? At the first in a new series of Resolution Foundation events examining intergenerational issues, supported by the Nuffield Foundation, our analysts presented research examining the long-term effects of recent recessions on young people. In a panel chaired by David Willetts, Yvette Cooper MP, Chief Secretary to the Treasury during the financial crisis, and Paul Gregg, Professor of Economic and Social Policy at the University of Bath, gave their reflections on the impact of recessions, and how public policy should change in response. Speakers Yvette Cooper MP, MP for Normanton, Pontefract and Castleford Paul Gregg, Professor of Economic and Social Policy at the University of Bath Stephen Clarke, Senior Economic Analyst at the Resolution Foundation Chair: David Willetts, Executive Chair of the Resolution Foundation
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The hangover: Why young workers can’t shake off the recession
- 1. May 19@resfoundation 1 The hangover Why young workers can’t shake off the recession Yvette Cooper MP, MP for Normanton, Pontefract and Castleford Paul Gregg, Professor of Economic and Social Policy at the University of Bath Stephen Clarke, Senior Economic Analyst at the Resolution Foundation Chair: David Willetts, Executive Chair of the Resolution Foundation #eventhashtag Wifi: 2QAG_Guest Password: Welcome_Guests
- 2. 2 1980s: it was all about youth unemployment Change in output, youth unemployment and young people’s real hourly pay three last recessions @resfoundationSource: ONS GDP (CVM SA, £M), Quarterly Labour Force Survey, Annual Survey of Hours and Earnings
- 3. 3 1990s: mostly about unemployment, though pay fell Change in output, youth unemployment and young people’s real hourly pay three last recessions @resfoundationSource: ONS GDP (CVM SA, £M), Quarterly Labour Force Survey, Annual Survey of Hours and Earnings
- 4. 4 Financial crisis: relatively small rise in unemployment Change in output, youth unemployment and young people’s real hourly pay three last recessions @resfoundationSource: ONS GDP (CVM SA, £M), Quarterly Labour Force Survey, Annual Survey of Hours and Earnings
- 5. 5 Financial crisis: but adjustment came through pay Change in output, youth unemployment and young people’s real hourly pay three last recessions @resfoundationSource: ONS GDP (CVM SA, £M), Quarterly Labour Force Survey, Annual Survey of Hours and Earnings
- 6. 6 Financial crisis: but adjustment came through pay Change in output, youth unemployment and young people’s real hourly pay three last recessions @resfoundationSource: ONS GDP (CVM SA, £M), Quarterly Labour Force Survey, Annual Survey of Hours and Earnings But are all young people the same?
- 7. 7 2009: a bad year to enter the labour market Annual GDP growth (CVM SA) @resfoundationSource: ONS GDP (CVM SA, £M)
- 8. 8 2009: a good year for film? @resfoundation
- 9. 9 Employment: the hangover was worse for people with lower qualifications Change in chance of being employed for a 3 percentage point increase in the unemployment rate in year after leaving education, by highest qualification held: UK, 2000-18 @resfoundationSource: RF modelling using ONS, Quarterly Labour Force Survey
- 10. 10 Pay: the hangover lasted longer for graduates Change in chance of being employed for a 3 percentage point increase in the unemployment rate in year after leaving education, by highest qualification held: UK, 2000-18: 2000-2018 @resfoundationSource: RF modelling using ONS, Quarterly Labour Force Survey
- 11. 11 Jobs: because they found themselves in lower-paying roles Change in chance of being in a low-paid occupation for a 3 percentage point increase in the unemployment rate in year after leaving education, by highest qualification held: UK, 2000-18 @resfoundationSource: RF modelling using ONS, Quarterly Labour Force Survey
- 12. 12 Jobs: something that didn’t happen in the ‘90s Change in chance of a graduate being in a low-paid occupation for a 3 percentage point increase in the unemployment rate in year after leaving education: UK @resfoundationSource: RF modelling using ONS, Quarterly Labour Force Survey
- 13. 13 How to deal with hangovers @resfoundation
- 14. 14 Active labour market policy needs to focus on job switching Typical change in nominal hourly pay over the course of a year for people in different occupations, by tenure length and for those aged 18 to 25: 2008 - 2018 @resfoundationSource: ONS, Two-Quarter Longitudinal Labour Force Survey
- 15. 15 Pay attention to the current ‘scarred’ and the ‘still to be scarred’ Distribution of years of consecutive growth in GDP, 1700-2018 @resfoundationNotes: Recessions are defined here as years in which output falls. The choice of 1944 and 1974 as start dates represents the first recession year in a new business cycle. Source: RF analysis of ONS and Bank of England, Millennium of data v3
- 16. 16 The class of ‘08, ’09, ’10, ‘11 @resfoundation • Recessions hurt, particularly the young, but particularly those that enter the labour market in their midst • The ‘crisis cohort’ suffered severe and lasting impacts to their: Employment prospects – particularly those with lower qualifications Pay progression – wages take up to seven years to recover Job prospects – much more likely to find themselves in low-paid occupations
- 17. May 19@resfoundation 17 The hangover Why young workers can’t shake off the recession Yvette Cooper MP, MP for Normanton, Pontefract and Castleford Paul Gregg, Professor of Economic and Social Policy at the University of Bath Stephen Clarke, Senior Economic Analyst at the Resolution Foundation Chair: David Willetts, Executive Chair of the Resolution Foundation #eventhashtag Wifi: 2QAG_Guest Password: Welcome_Guests
Editor's Notes
- Morning, This presentation and the report it’s based on (which I’m sure you’ll all be reading cover to cover) is about a topic we all know a lot about: the recession. It’s also about a group – young people (more specifically those 18-29) – that we also know a lot about, either because we were those people back in 2008 or because lots of research by us and others has been done on them. However, today I want to focus on a specific group of young people. We dub them the ‘crisis cohort’ they are the people who left education between 2008 and 2011 and so entered the world of the work in the midst of the recession. In particular I will show you how, while it’s been no picnic in many respects being young in the last decade or so, this group has faced specific disadvantages. First though let’s put the last recession in context and touch on how young people in general fared.
- So while 2009, and the years after was clearly a bad time to start out in the world of work, there is perhaps a silver lining, 2009 also gave us a film that perhaps captures the experiences of the cohort who came of age at this time. For the fans in the room I’m sure you’ll recognise that this is the scene from the hangover. A film that – a bit like the crisis cohort – starts out with some young(ish) people pretty excited about what lays ahead of them, but quickly descends into a series of disastrous mishaps.
- Reference Lindsay work. One of the ways to encourage pay progression is also to encourage geographical mobility, future work will explore some of the barriers to this, including housing.