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Action needed after pandemic double-blow to young adults

Approach similar to that used to combat pensioner poverty in 1990s needed to help millennials

This last year has left all our worlds turned upside down. However, for many millennials, this is the second time in short succession that their attempts to begin working life have been interrupted.

While those in higher-paid professional jobs have largely been able to work from home as the pandemic raged, those in lower-paid retail, arts, hospitality and leisure jobs - disproportionately younger workers - have either been laid-off or required to continue working in risky conditions.

This has contributed to young adults being hardest hit by job losses. Research published this week by the Economic and Social Research Institute (ESRI) - funded by the Community Foundation for Ireland - found there were 112,000 fewer people aged 15 to 34 in paid work in the final quarter of last year than in late 2019.

By contrast, there were only 93,000 fewer workers aged 35 and over despite this group making up the bulk of the workforce. This corresponds to a 14 per cent decline in employment for those age 15 to 34 compared to just 6 per cent for those who are 35 and over.


While worrying in their own right, such job losses have the potential to compound the still-lingering effects of the financial crisis. This also hit younger adults hardest, with those who did not emigrate facing a labour market that had not - even on the eve of the pandemic - fully recovered.

This is illustrated by the fact that although employment rates had regained their pre-crisis level for workers aged 35 and over by 2017, they remained well below that level for younger workers even at the end of 2019.

Real earnings

While some of this is explained by young adults staying in education longer, the share of 20 to 24 year-olds not in employment, education or training was a third higher in 2019 than in 2007. Of even greater concern, the average real earnings of those born in the 1990s were no higher in their early 20s than of those born in the 1960s at the same age.

In addition to poor prospects in the labour market, younger adults are most exposed to the private rental sector, where rents have risen by 85 per cent in Dublin since 2011. This is related to the sharp decline in home ownership rates, which have fallen from 61 per cent at age 30 for those born in the 1960s to just 32 per cent for those born in the 1980s.

Such developments are not unique to Ireland, with similar patterns emerging in the US and Britain. But they should nevertheless be of serious concern to policymakers.

Research from the University of Cambridge has found that millennials are the first generation in living memory where a majority say they are dissatisfied with democracy in their 20s and 30s. Should that really be of surprise when so many are not seeing nearly the same growth in earnings as their parents did?

One area where policymakers can help is by ensuring the provision of high-quality training programmes with sufficient capacity to cater for the numbers that will need them in the aftermath of the pandemic. Doing so is likely to require a significant increase in Government expenditure on such programmes, above and beyond the relatively modest €210 million rise announced to date.

Deserving of attention

Measures that act to tackle the root causes of high rents will also benefit younger adults. While the focus of policy in recent weeks has been on those for whom home ownership is within grasp, those far from becoming first-time buyers are also deserving of attention.

Such measures could include policies that increase the supply of housing, such as the taxation of vacant and undeveloped land. However, increasing housing supply significantly will take time.

There may therefore be a case in the interim for examining whether the current system of housing supports for low-income private renters is adequate. Limits on the rent that can be paid for a property covered by Housing Assistance Payment were last revised in March 2017, since when rents have risen by 25 per cent nationally.

Government has shown itself capable of addressing profound social challenges in the past. When pensioner poverty was rising rapidly in the late 1990s, successive governments acted swiftly to halt and reverse this rise. Similar focus and determination is needed to address the plight of younger adults today.

Barra Roantree is an economist with the Economic and Social Research Institute