The Great Recession and the Covid-19 crisis hit two key sectors for the under 30s, or millennials. The analysis of El Pais
The Great Recession and Covid-19 will cause wages to drop for those entering the job market, even if the economy recovers.
Entering the labor market in full crisis, we read in El Pais , drastically reduces the chances of finding a job, as well as the wages received; and in less than a decade there have been two. The Great Recession of 2008-2012 and the crisis resulting from the pandemic left an impractical job market for the under 30s, much more exposed due to their short work experience and the high rate of temporary contracts in this age group. "This crisis is expected to leave scars, especially for millennials, as this is the second particularly deep recession to hit them before they turn 30," explains Marcel Jensen, Fedea researcher and co-author of the Lost in the report. recession: Employment and income of young people in Spain, presented Monday.
“To what extent will this situation affect the rest of their careers?” Asks a professor from the Autonomous University. The study concludes that those starting work for the first time in the midst of a crisis will see their salaries decrease during the first 15 years of their careers. According to his estimates, a worker entering the labor market at the end of the Great Recession in 2013 would have a 7.2% lower daily wage than a similar worker who entered in 2007.
But not only them, but perhaps also those who will come after them. "What surprised us from the study of previous crises is that young people who enter later, when economies are recovering, do so in worse conditions than before the crisis," summarized the expert. "We cannot forget that young people were still in a very delicate situation before the 2020 crisis, with unemployment rates that were almost double those of 2008," he added.
This is the so-called "scar of recessions", which although not studied in the Fedea report, the document anticipates that it could be due "to the introduction of labor reforms during recessions that make hiring more flexible". “The 2012 labor reform included reforms to reduce duality, but it also made youth employment more precarious,” Jensen explained.
This healing effect is clear in the ecosystem of work in Spain. In 2019, the median monthly real wage of young people aged 18 to 35 was lower than in 1980, with drops ranging from 26% for those aged 30 to 34 to 50% for those aged 18 to 20. According to Fedea, these falls are mainly due to a “very strong” reduction in the duration of work and an increase in the weight of part-time work. The combined impact means a decrease in the average number of full-time equivalent working days from 73% to 22%.
In Spain, this situation is much more serious than in the European Union, as the Fedea foundation of financial studies explains, which summarizes the employment situation of young Spanish people: "They suffer on all fronts: they have very low employment rates, very high rates temporary work with huge job turnover, and low wages. "
Between 1983 and 2019, unemployment among Spaniards aged 20 to 24 was 32.7% and 22.3% for those aged 25 to 29. In parallel, in the EU the average was 17.8% and 11.5%, respectively. These differences have been extremely accentuated in times of crisis, with unemployment peaking for Spaniards aged 20-24 exceeding 50% in 2013, while in the Union this peak did not reach 25%.
The report, prepared by Samuel Bentolila, Florentino Felgueroso, Marcel Jansen and Juan F. Jimeno, understands that these differences lie in the high number of “involuntary” temporary contracts that young Spanish people have compared to those of their European partners. “When a recession hits, the first contracts to be terminated are temporary ones,” Jansen explained over the phone.
The researchers also add educational imbalances as another problem to be solved to correct employment difficulties. While the dropout rate has dropped by 45 points over the past four decades, the percentage of college graduates has quintupled for women and tripled for men. "This has further reduced the employment rates of younger workers," which meant that "most of those entering the labor market have no previous experience in it," says the Autonomous University expert.
Finally, to the critical Spanish job ecosystem, it is added that both the Great Recession and the covid-19 crisis have punished two key sectors for the under 30s. The study recalls that the real estate bubble has crushed the construction sector, "where they worked many young people who had dropped out of school ”, while services, where young people were“ over-represented ”, was the sector that suffered the most from the pandemic. “The Spanish work system favors sectors such as hospitality and construction to use temporary contracts,” explains Jansen.
(Extract from the press review of Eprcomunicazione )
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/recessione-economia-millennial/ on Sat, 03 Apr 2021 06:00:06 +0000.