Youth unemployment could top 1 million due to the impact of the coronavirus, according to a report from the Resolution Foundation.

The think tank’s report Class of 2020: Education leavers in the current crisis, warns that unemployment among 18 to 24-year-olds could rise by an additional 640,000 this year, bringing total youth unemployment to just over a million.

It also predicts that employment rates for graduates entering the labour market will be 13% lower in three years’ time. Lower-skilled workers’ employment rates could fall by as much as 37%, it adds.

A larger proportion of people looking to begin their careers in sectors that are currently “shut down”, such as retail and hospitality, will see their employment prospects decline over the medium to long term.

“The 800,000 young people set to leave education this year amid an unprecedented economic crisis are facing huge immediate unemployment risks, and longer-term damage to their careers,” said report author Kathleen Henehan, a research and policy analyst.

“The ‘corona class of 2020’ could face years of reduced pay and limited job prospects, long after the current economic storm has passed, unless additional support is provided fast.

“The government must therefore work with education providers and businesses to do everything they can to limit these long-term scarring effects.”

Those who are working are also likely to face reduced pay. The report finds that, one year after leaving education, the pay of graduates is projected to be 7% lower, and 9% and 19% lower for mid and low-skilled workers respectively.

The Resolution Foundation demands “swift and sweeping” policy response from the government to “reduce the amount of scarring that today’s education leavers experience”.

It urges the government to prioritise support in two areas: helping more young people to stay in education for longer, and targeting job support at those who are entering the labour market for the first time.

Its suggestions include:

• A job guarantee scheme similar to the Future Jobs Fund, where the state works with employers, charities and local authorities to offer temporary jobs to young unemployed people
• Flexible arrangements to allow students to remain in education for a further six months
• Robust, targeted and regional interventions to support young people into work, based on timely labour market information
• Contingency measures to ensure that young people that have been unable to access work-based training – for example as part of an apprenticeship – do not fall through the cracks
• A system of additional maintenance support for students, such as means-tested maintenance loans or bursaries, or offering student finance on a modular basis so students don’t have to worry about being ‘locked in’ to completing a full course.

Alex Beer, welfare programme head at the Nuffield Foundation, which supported the research, said the coronavirus crisis was “exacerbating existing inequalities”.

She said: “It is important that the government, higher education providers and employers act now to limit the long-term effects of the economic downturn, by creating opportunities for those entering work and training and supporting those who choose to stay in education.”

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