Class of 2020: A lost generation in the post-COVID economy?

The South China Morning Post has a lengthy article explaining how young people starting out in the jobs market face a hit to their prospects that could endure years after the Covid-19 downturn runs its course. As job offers get withdrawn and hiring is halted, there is already a spike in regional youth unemployment for the short term. However and in the long term, the effects on the Covid-19 cohort could lead to wider social and political problems e.g. like what happened in Indonesia after the Asian financial crisis.

The SCMP article noted:

  • In Indonesia, the virus has caused almost 2.8 million people to lose their jobs, according to the Manpower Ministry and the Workers Social Security Agency.
  • In Malaysia, an estimated 2.4 million people are expected to lose their jobs, going by data from the Malaysian Institute of Economic Research (MIER). Malaysian unemployment already stands at 11.67%.
  • In Thailand, the head of the Thai Chamber of Commerce thinks about seven million jobs have been lost already, and the figure will hit 10 million if the outbreak drags on for two to three more months.

SCMP then went on to quote a recent Conversation article (The next employment challenge from coronavirus: how to help the young) by Economics professor Jeff Borland of the University of Melbourne that pointed out:

“Many international studies have shown that trying to move into employment during a major economic downturn cuts the probability of employment and future earnings for a decade or more. Why this occurs is less well-established. Reasons suggested include being forced to take lower-quality jobs, losing skills and losing psychological well-being.”

Walter Theseira, a labour economist and associate professor of economics at Singapore University of Social Sciences, was then quoted as saying the Covid-19 downturn could create “lasting scarring” on the graduates this year:

“If their careers start badly, it would affect their earnings for a number of years because they would lack the same experience as peers who started in a more secure position.”  

Finally, Grace Lee Hooi Yean, head of the Economics Department at Monash University, Malaysia, said shrinking salaries and the downsizing of companies mean that graduates might have to seek out professions outside their areas of study to survive:

“This looming crisis could trap a generation of educated and capable youth in a limbo of unmet expectations and lasting vulnerability if the graduates are not ready to face reality and adapt to the new challenges.”

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