Covid-19 will blight the prospects of a generation | Free to read
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
What a lousy time to graduate. This year’s university leavers have had exams cancelled and marking schemes scrubbed. They’ve been robbed of celebratory balls and award ceremonies.
Worst of all, they are graduating into the worst economy since the Depression, with nearly 15 per cent unemployment in the US and 36m people newly out of work. In the UK, hiring intentions are at their lowest level in at least 15 years, with one-fifth of employers planning to let people go over the next three months. Job vacancies are down by two-thirds year on year, according to the Institute for Employment Studies.
New graduates are already suffering. A survey of UK university students in their final year by Prospects found that 30 per cent had lost their job or had an offer of one cancelled or deferred. In the US, 35 per cent of college students who had been offered internships have now had them cancelled, and most received no compensation, according to a survey by Yello.
The situation is even worse for those who had not already lined up a plan. Two-thirds of UK graduates have seen a job application withdrawn or put on hold because of the pandemic, according to a Bright Network survey.
Nor is the woe likely to be confined to this year. Some US employers are telling the National Association of Colleges and Employers that recruiting for the class of 2021 will be affected, by spending cuts, bans on campus visits and cuts to their lists of target schools.
If history is any guide, this grim start will haunt new graduates for years to come — the Institute for Fiscal Studies found that Britons who left school or university in a recession made less money five years later. In the US, the income declines lasted a full decade. The handicap feels particularly unfair because this recession was caused by lockdowns designed to prevent the spread of a disease that affects the elderly far more severely than the young.
The shutdowns have also hit the hospitality and entertainment sectors hard, all but eliminating the bartending and waiting jobs many young people have traditionally used to gain work experience and stay solvent while they applied for career-track positions. And they can’t even pass the time by travelling.
That puts the onus on companies that can work virtually to step up and prevent this generation from paying a disproportionate price. We’ve had a lot of talk during this crisis about stakeholder capitalism and the need to prevent economic scarring. This is one of those moments where push comes to shove.
So far, the response has been mixed. Accountancy firm BDO has furloughed its first-year trainees, and banks Santander and Lloyds have cancelled summer internships in the UK.
But the big Wall Street banks, including Goldman Sachs, Citigroup and JPMorgan Chase, are pushing ahead with online summer programmes and will bring in thousands of new trainees on schedule in the autumn. “We want to be there for our communities. We need new blood to make sure that we can forge ahead,” says Ryland McClendon, who runs career development programmes for JPMorgan.
Citi has also guaranteed that participants in its abbreviated summer intern programmes will be offered full-time jobs in 2021, as long as they meet minimum requirements. “We saw an opportunity to relieve some of the stress and uncertainty so many young adults are feeling right now, especially those preparing to enter a job market in the midst of great economic uncertainty,” bank executives explained in a blog.
That is not only admirable but good business. Recovery from Covid-19 may come slowly. But, when it does, some companies will have well-trained young staff ready to get to work. Others will only have a string of disappointed youngsters with bitter memories.
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