A new report analyses the impact that COVID-19 has had on youth unemployment and how this is likely to incur significant economic and fiscal costs for the UK economy. 

A joint report by the Learning and Work Institute and The Prince’s Trust finds that it will be young people who have to bear the brunt of the unemployment crisis.

A study conducted by HSBC found that, whilst some areas of the economy will begin to see a recovery, it will be young workers who face the longest impact when it comes to unemployment.

This is largely attributed to the fact that younger workers are under-represented in the industries which are recovering and over-represented in the sectors which have been severely impacted by COVID-19 for example retail and leisure.

As such, the report outlines long-lasting damage from youth unemployment which will see the numbers linked to this continue to rise.

Not only have workers aged between 16-24 made up over 60 per cent of employees removed from payroll over the past year, longer-term structural changes in the labour market are likely to reduce future employment opportunities for young people.

Financially, the economic cost of higher youth unemployment in terms of lost national output is forecast to be £5.9 billion in 2021, rising to £6.9 billion in 2022. In terms of fiscal loss, in lower tax revenue and higher spending, this is set to be £2.5 billion in 2021, rising to £2.9 billion in 2022.

In addition to all of this, the long-running scarring cost, over the next seven years, is expected to stand around £14.4bn. This describes the impact on employment and earnings young people are likely to suffer for at least seven years, due to entering the labour market at a time of higher unemployment.

The report also warns that some groups within the young workers age bracket will be hit harder than others. People with no qualifications have seen a significant decline in working hours (34 per cent) compared to those educated at degree level (7 per cent) over the course of the pandemic.

Furthermore, the decline in hours worked for Black young people (49 per cent) has been three times higher than for white young people (16 per cent). This means that younger workers have not been impacted evenly and that the pandemic has exacerbated pre-existing inequalities between certain groups.

Stephen Evans, Chief Executive of Learning and Work Institute, said:

Young people have been at the forefront of the coronavirus jobs crisis. While we are hopefully slowly emerging from the worst of the pandemic, the legacy will be with us for years to come in the form of higher youth unemployment.

This is not just bad for young people. It will have a huge hit on our economy and our public finances, and it risks a long-lasting scarring impact on those affected.

If we are to tackle the looming youth jobs crisis, the Learning and Work Institute believes the Government must work with partners to urgently roll-out a ‘Youth Guarantee’ to support young people to access a job, an apprenticeship, education, or a high quality training opportunity.

*These findings are detailed in the joint report between The Prince’s Trust and the Learning and Work Institute entitled ‘Facing the future – employment prospects for young people after Coronavirus’.





Monica Sharma is an English Literature graduate from the University of Warwick. As Editor for HRreview, her particular interests in HR include issues concerning diversity, employment law and wellbeing in the workplace. Alongside this, she has written for student publications in both England and Canada. Monica has also presented her academic work concerning the relationship between legal systems, sexual harassment and racism at a university conference at the University of Western Ontario, Canada.