‘Lockdown generation’: Over 1 million youths face job losses

YOUTH unemployment rate may hit double-digits this year, as companies lay off workers amid the pandemic. — REUTERS

MORE THAN a million young Filipino workers may lose their jobs this year, pushing the youth unemployment rate to nearly 20% as the coronavirus takes its toll on the labor market, the Asian Development Bank (ADB) and the International Labour Organization (ILO) said.

“Youth will be hit harder than adults in the immediate crisis and also will bear higher longer-term economic and social costs,” the ADB and ILO said in a joint report on the impact of the COVID-19 crisis on youth employment.

“Before the pandemic, young people were already facing challenges in the labor market. These are worsened by the COVID-19 crisis, and its multiple effects threaten to create a ‘lockdown generation’ that will feel the weight of this crisis for a long time,” it added.

The ADB and ILO estimated 687,000-1.019 million young workers aged between 15 to 24 in the Philippines could be out of  job this year, as it expects the economy to shrink by 3.8%. The government sees a full-year economic contraction of 5.5% this year.

Youth unemployment rate in the Philippines could reach 15.1% to 19.5% by the end of 2020, more than double 2019’s 6.8%.

However, the extent of the job losses may depend on how long it will take for the government to contain the COVID-19 virus. The ADB and ILO based the estimates on two scenarios: one where the spread of COVID-19 is contained within three months from onset and the other within six months (April to September for most countries).

The Philippines is now facing the longer, six-month containment scenario, as restrictions are still in place to control the rise in coronavirus infections.

Nearly a fifth (19.8%) of the youth job losses in the Philippines will come from hotels and restaurants, followed by retail trade (16.2%), agriculture (15.2%) and construction (12.9%).

The ADB and ILO said the 13 countries in the Asia-Pacific region covered by its report may see youth unemployment rates double this year. Joblessness among young workers in the region could range between 9.9 million and 14.8 million, although a longer containment period will result in more jobs lost.

Four sectors pummeled by the pandemic are wholesale and retail trade; manufacturing; real estate and business activities; and accommodation and food service sector.

“Nearly half of young workers in the region are employed in the four sectors hit hardest by the crisis. This is one of the reasons that young people face greater labor market disruption and job loss than adults due to COVID-19,” it said.

Citing previous studies, the ADB and ILO said young workers tend to suffer more from the long-lasting labor market impact of economic crises as the youth unemployment rate tends to rise faster than the adult rate during recessions.

Earning losses are also found to recover rather slowly, while the fewer job opportunities and lower income may delay their acquisition of productive assets such as properties.

Aside from job losses, young workers face reduced working hours, lower earnings, disruptions in education and training, and difficulties in transitioning from school to work.

Lockdown measures to curb the coronavirus has caused significant reduction in working hours, which fell 7.1% in the first quarter or equivalent to 125 million full-time jobs lost across the region, against the fourth quarter of 2019. In the second quarter, the ILO estimated a larger decline at 13.5% or a loss of 235 million full-time equivalent jobs.

Due to reduced working hours, young workers are more likely to suffer from outright job loss than temporary suspension since they have less job tenure and are “cheaper to fire.”

“Young workers who enter the labor market during a recession experience earnings and wage reductions. They are forced to compete with more job seekers (the majority of whom are more experienced) for fewer jobs. University graduates earn less for a decade or longer. In general the losses are more pronounced for disadvantaged entrants,” according to the report.

The ADB and ILO said the crisis in youth unemployment could be mitigated if governments will “adopt large-scale and targeted responses” that focus on improving labor market policies, and minimizing the impact of education disruptions.

Some recommended programs include wage subsidy for the youth, job creation, employment planning and job search, widening their access to training, and larger investments in youth entrepreneurship.

“Prioritizing youth employment and maximizing youth productivity in the COVID-19 recovery process will improve Asia and the Pacific’s future prospects for inclusive and sustainable growth, demographic transition and social stability,” they said. — Beatrice M. Laforga