The generational impact of COVID-19

In our previous Law-Nows in this series, we looked at the impact of COVID-19 and returning to work on mental health and the effect of flexible working post lockdown on fathers. In this article we consider the growing evidence of the intergenerational impact of COVID-19. We will focus particularly, on Generation Z (1995 - present), Millennials (1980 - 1994) and Baby Boomers (1946 - 1964) and the different economic and employment challenges they are facing.

The lasting impact on Generation Z

It is no secret that young people have suffered significantly as a result of COVID-19, exemplified by the recent exams row and the exponential increase in unemployment. Of the working age population, those aged 17 were the most likely to be furloughed under the Coronavirus Job Retention Scheme (CJRS). According to government statistics, around 62% of employees in the 16-24 age group were furloughed as at 31 July 2020, compared to an overall average of 32% in other age groups. This is largely owed to the fact that they are twice as likely to work in sectors severely impacted by lockdown measures such as retail, hospitality and leisure.

Not only are young people likely to have been adversely affected by furlough, unsurprisingly, there has been a staggering increase in the number of young people seeking additional financial support, with one in six claiming benefits. Recently it was announced that the UK unemployment rate has risen to its highest level for two years, with over 695,000 people being made redundant as a result of the pandemic. Figures suggest that Generation Z have experienced the greatest increase in unemployment, with around 156,000 fewer young people in employment since May 2020. With the CJRS ending on 31 October 2020, it is hoped that the Job Support Scheme announced by the Chancellor on 24 September 2020 will allow many young people, whose jobs exist only because of the furlough scheme, to remain in employment. For further information on the Job Support Scheme, please refer to our update available here.

Whilst the CJRS has helped to protect existing workers, it has faced criticism in that it does not provide a solution to those who have not yet entered the labour market or who would otherwise expect to see a progression in their earnings. Concerns surrounding unemployment are further compounded for young people by the fact that, due to their age, they are less likely to have the skills and connections to help them easily navigate the employment market and recruitment process. This is an unfortunate unintended consequence of the crisis for those who are at the very beginning of their careers and looking to gain experience.

As employers try to navigate their way out of the COVID-19 crisis, many have adopted a recruitment freeze and cancelled or scaled back work experience placements and graduate schemes. For those employers who are still recruiting, many have reported a significant increase in applicants, with reports that applications increased by a third in June 2020.

Millennials

Whilst the older generations are more vulnerable to the COVID-19 virus itself, the economic effect on millennials in particular cannot be understated. Referred to as “the recessionals” by some commentators, many entered the job market during the financial crisis of 2007 – 2008 and now face their main earning years being hampered by a second major downturn. This “double blow” is another setback and one which may take many years to recover from.

The “lost generations”

Shifting our focus to the other end of the age spectrum, statistics are showing that the number of over 50s out of work has doubled since March. According to a report by the Centre for Ageing Better, the number of over 50s on unemployment-related benefits nearly doubled between March and June 2020, and research from Ipsos Mori warns that 250,000 over-50s in the UK could face leaving the labour market indefinitely as a result of being made redundant. With an already ageing population, Ipsos Mori have said that this could lead to a “lost generation” of retirees in the UK.

Those looking to retire are also faced with difficult financial decisions and may have to work longer in order to supplement their retirement income. Research from the Financial Conduct Authority indicates the over 60s had the most significant drop in their earnings since the start of the pandemic in the UK, with the over 40s most likely to have sought help in the form of a mortgage holiday or additional credit cards.

What can employers do to help?

• Awareness: It sounds simple but it is crucial that employers (and individuals within your organisations making important people related decisions) are aware of the intergenerational impact of the pandemic on your workforce. Awareness means that decisions (made in difficult times and often under severe time pressure) can be reviewed through the intergenerational impact lens.

• Foster a good intergenerational culture: There are no easy answers to addressing the generational differences, however it is vital to support and develop an age-inclusive culture to avoid deepening intergenerational divides. Emily Andrews of the Centre for Ageing Better put it well when she said “If we want to ensure a genuine recovery from this crisis, we must avoid a narrative that pits young against old.” A study by Age UK has shown that there are many benefits of good contact between generational groups. Employers in particular can benefit from productivity, retention and improved climate and commitment through strategies to promote intergenerational contact.

• Consider the impact of working from home on different generational groups: Interestingly, according to a study by Cushman and Wakefield, 70% of Generation Z and 69% of Millennials have found working from home more challenging, compared to 63% of Generation X (1965 – 1979) and 55% of Baby Boomers. Typically, young workers have poorer home working settings (such as less space, no designated office) and this had led to a more difficult experience. Also junior employees (who tend to be in the younger age range within a workforce) have reported that their development is being hampered as the homeworking environment does not allow them the same opportunity to develop and learn as the physical office environment. Employers should therefore think about how best to recreate learning and development opportunities for this group. At the other end of the scale, Baby Boomers and Generation X are more likely to be dealing with balancing childcare and caring for older relatives while working from home and so need different support from their employer, most likely in the form of flexibility. Given that homeworking looks set to be with us for some time to come, it is crucial that employers consider the varying demands across generations and do not assume a “one size fits all” approach.

• Remember your pipeline and retention: Difficult decisions will inevitably have to be made but employers should bear in mind the importance of developing its talent pipeline. An overly aggressive cull of for example graduate programmes will inevitably have a negative effect further down the line. Equally, older workers can bring a huge range of untapped skills and experience to the workforce, so ensure any decisions do not inadvertently push older workers out of your workforce prematurely.

• Funding and support: Make use of external support and funding available. Three specific Government initiatives have been launched which are aimed at protecting jobs and creating work for Generation Z:
  • Kickstart scheme:- The Kickstart Scheme is a UK government initiative launched on 2 September 2020 intended to create work for those aged 16-24 who are currently claiming universal credit and deemed to be at risk of long-term unemployment. The initiative is a £2 billion fund which will be used to create six-month work placements, which must be new jobs rather than replacing existing vacancies. The funding available will cover 100% of the relevant national minimum wage for 25 hours per week, as well as the associated employer national insurance contributions and employer minimum automatic enrolment contributions. Employers must submit a “bid” to gain funding under the Kickstart scheme, and each bid must outline how the role will help participants to develop their skills and support them in looking for long-term work. Employers must make an application for a minimum of 30 job placements, and there are options to partner with other employers to reach the minimum number. It is anticipated that the first placements will be available from November 2020. More than 500 organisations have already signed up for the scheme, including Tesco and Network Rail.
  • Scotland’ Youth guarantee:- The Scottish Government has pledged that £60m will be invested in a Youth Guarantee, a partnership between the private sector, third sector and public sector. The ambition is that within 2 years, every 16-24 year old in Scotland will either be in paid employment for a period between 12-24 months, enrolled in education, actively involved in an apprenticeship or training programme, or engaged in a formal volunteering programme. The implementation plan is still in development, and therefore the specifics of how the funding will be used are yet to be announced.
  • Traineeships:- Separately, the UK government has recently introduced the Traineeship Scheme, open to employers in England. Scotland, Wales and Northern Ireland will receive £21 million to support similar schemes. Traineeships are aimed at those aged 16-24. The scheme operates as a form of unpaid work experience rather than a job creation scheme. Traineeships can run for a period from 6 weeks to 6 months and are intended to help young people with limited or no work experience to gain skills and experience. From 1 September 2020, employers will receive a grant of £1,000 for each trainee they take on under the scheme.

• Consider specific support for older workers: Many have suggested that government initiatives to help people to get back in employment post-COVID have focused too much on younger workers. Stephen Evans, chief executive of the Learning and Work Institute, said “the lack of focus on older workers risks becoming a simmering crisis”. Calls are being made at a government level to offer more support to older workers. In the interim, employers should consider what specific support they can offer older workers or older candidates.

Getting the balance right is a tricky one for employers and it can seem impossible to reconcile the conflicting interests. However undoubtedly the first step in dealing with the intergenerational impact of COVID-19 is to ensure awareness of the issue amongst key decision makers in order to ensure that decisions try to balance up the competing demands and challenges facing the different generations.

It will be interesting to see how the workforce changes over the coming months and years and we will continue to explore the ways in which employers are required to adapt and address the intergenerational issues arising. We are also eager to hear your thoughts, please do contact us at [email protected].