Generation exiled: the business risks of discarding young workers
The youngest employees are bearing the brunt of pandemic-induced redundancies, but this trend is likely to create problems for businesses in the longer term. Those operating last-in, first-out policies risk jettisoning highly talented post-millennials who could prove vital to their survival
After she was made redundant from her role as a writer for French travel firm Voyage Privé in July, Abigail Lister, 24, found herself “firing off applications for literally any job I could find”. Despite applying for nearly 100 vacancies, she was unable to secure permanent full-time employment.
“It just seemed impossible,” says Lister, who estimates that she heard back from only 10% of the employers she’d contacted. “So many young people with similar skills were applying for the same jobs.”
Lister has since become a successful freelance writer, but her experience during the Covid crisis is not unusual. The number of payrolled employees in the UK over the 12 months from March 2020 fell by 813,000, according to the Office for National Statistics. Of this total, 53.7% were aged under 25.
The Centre for Economic Performance at the London School of Economics surveyed just over 10,000 people aged 16 to 65 in the UK between September and October 2020 about their employment experiences during the pandemic. It found that 11.1% of respondents aged 16 to 25 had recently lost their jobs, compared with only 5.3% of those in the second most badly affected age group – the next youngest (26 to 35).
Lee Elliot Major, an associate of the Centre for Economic Performance and professor of social mobility at the University of Exeter, co-wrote the research report. He warns that the current high levels of youth unemployment could scar a whole generation.
“Evidence suggests that, if you lose a job early in your career, it can cause you to be in insecure employment for many years and permanently damage your lifetime earnings,” Major says.
Such findings are also a concern for Emma Parry, professor of HR management and head of the Changing World of Work Group at Cranfield University. She agrees that there’s “a lot of evidence that young people don’t have the same outcomes in the labour market later in life if they have become unemployed early in their careers. But, perhaps even more worryingly, an early job loss also has an impact on people’s wellbeing. At the extreme, it can lead to social withdrawal and mental health problems.”
Those aged 16 to 25 are more likely than older people to have been employed in industries worst hit by the lockdown restrictions – hospitality, retail and travel, for instance. But, added to that, their typically lowly position in the hierarchy has been a key factor in the redundancy selection process of many firms, according to Parry.
“Quite often in organisations, it can be slightly easier to argue in favour of losing entry-level employees, either because they’re not as valued or they have yet to build up working relationships,” she says. “Redundancy decisions shouldn’t be based on any of these factors, of course, but it is something that we do see.”
What do businesses stand to lose?
There is a persuasive business case for keeping young people in employment. Losing a generation of talent could be crippling for employers in the longer term.
Parry says: “Evidence tells us that organisations that invest in their employees during economic downturns are the ones that do better coming out of them.”
Diversity of thought in an organisation has long been shown to have a positive impact on innovation and market growth. For instance, research published in Harvard Business Review in 2013 found that firms with “two-dimensional diversity” – diversity across inherent factors, such as age, race and gender, as well as acquired diversity, such as language skills or cultural fluency – were 45% more likely than those lacking it to have increased their annual market share.
Parry believes that any organisation that loses its youngest employees risks reducing its diversity of skills and attitudes, along with the proven benefits these bring.
“There is evidence that younger people have particular characteristics in being more entrepreneurial and more motivated to learn and develop,” she says. “They also bring fresh perspectives and new ideas.”
Ensuring a sustainable supply of young talent
Apprenticeship schemes offer a route into the workforce for many school-leavers. But such opportunities have decreased markedly, largely because of the Covid crisis. There were 36,700 fewer starts in the first half of the current academic year compared with the equivalent period in 2019/20.
“We know that organisations that develop talent pipelines, rather than bringing people in at multiple levels, are often more productive,” Parry says. “They have a more loyal workforce and a more trusting relationship with their employees.”
Siemens is one firm that chose to continue investing in young talent during the pandemic. The British arm of the German manufacturing group took on 176 graduates, interns and apprentices in 2020, for instance. It plans to bring in a further 180 young people through its early careers programme this year.
Valerie Todd, HR director of Siemens UK and Ireland, explains the decision: “Downturns in the market are short-lived; the value that young people bring lasts much longer. You need to apply a degree of strategic thinking to maintain your talent pipeline.”
She warns that businesses that fail to do this will be left with skills gaps when their more experienced employees leave. “You’re then reliant on recruiting in the open market, where you can face heavy competition with other companies that have done the same. You’ll find that you’re paying an escalated wage bill.”
Siemens has built relationships with numerous educational institutions, including the Teach First charity, Newcastle University and the University of Sheffield. Its schools engagement programme also involves developing STEM resources linked to the national curriculum.
For Todd, who has served as a government adviser on employment and skills, building a strong talent pipeline entails “tapping into communities or individuals who may not previously have thought about your organisation as a potential employer”.
She adds that the students who engage with Siemens “get an insight of what it’s like to work in an engineering or technology organisation. There’s a wider agglomeration of benefits to running these kinds of programmes, because they benefit the sector you’re in, as well as your own company.”
Grounds for optimism
As the lockdown restrictions are eased, confidence seems to be returning to employers and younger people. A survey published recently by LinkedIn revealed that hiring activity was up 22% per cent in April in the UK, while 84% of 16- to 34-year-olds were feeling optimistic about their career prospects — the highest proportion of all age groups.
LinkedIn’s UK country manager, Janine Chamberlin, believes that many employers need to change their approach to recruitment to bring young talent back in from the cold.
“Instead of looking at how many years’ experience that candidates have or the universities they attended, employers should be focusing on skills,” she advises. “This can go a long way towards attracting a much more diverse pool of talent.”
But any recruiter seeking to attract younger workers will still need to demonstrate the values they tend to find desirable in an employer, according to Todd.
“Even though they’re having a hard time in the jobs market at the moment, young people remain discerning buyers of employment,” she stresses. “The things that these candidates most often ask recruiters about are inclusion and sustainability. Woe betide you if you can’t give them a good account of what you’re doing in those spaces.”