What are the long-term impacts for people who graduate into a recession?
29 Jun 2020
Becci Newton, Deputy Director, Public Policy Research
Young people are typically hard hit in terms of employment in recessions and this is likely to be the case for the current, Covid one. Employment opportunities are constrained and employers prefer to take on people with a track record. As I’ve already said, where it is possible, locking into education can provide young people better protection than an early entry to the labour market.
But many of those completing qualifications at university this year will want to take their next step into employment, rather than pursue costly Masters or Doctoral studies. For these, despite the challenges they will see in the labour market, it is likely they will still get on better than their lower qualified peers, as higher education studies still confers better returns in the labour market.
However our latest graduates should be concerned about the quality of jobs available right now and in the short term, and about occupational downgrading. Balancing that, given their qualifications – and hopefully the support that their university’s careers team can provide - they will be able navigate and transition through these low quality jobs to gain graduate-level posts. They will need to keep moving and stay focused on their job goal as the graduate premium will dissipate over time.
The best-known economists are struggling to agree on the likely pace and shape of recovery. The government necessarily forced us into recession but it is likely to be harder and take longer to pull us out. Various options are being discussed, but policymakers know from experience that better qualified young people will be able to make progress as the labour market recovers.
The last recession saw differential growth between professional and non-professional roles – with professional roles seeing more rapid and consistent growth. Alongside this, we have the reassurance of the narrative about the need for higher level skills in our economy. If the last recession provides a guide, and the demand for professions continues to rise, the prospects could be reasonably hopeful for this year’s leavers. Equally, the Covid recession has shown that workers in white collar, professional jobs have been able to continue working because their employers can transition their roles to remote working, and thereby continue to be productive. The overlaps between these jobs and graduates’ skills again suggests those leaving this year could well take advantage of the differential labour market recovery – although it may take them a little more time than it usually might to realise the full labour market returns of their studies.
Also, graduates should not lose sight of the capabilities their higher education confers. We should set these in the context of the mega-trends for digitalisation and globalisation. Change is a certainty in all job roles. As such, the ability to continuously learn and develop as part of work becomes the crucial key skill. Given their studies – which should prepare this year’s graduates as capable learners – they should be well-placed in respect of the key attribute they will need to succeed and be resilient in employment.
Any views expressed are those of the author and not necessarily those of the Institute as a whole.