Youth unemployment could surge past one million in coming months as the Covid-19 recession punishes the "Corona class of 2020" with fewer jobs and lower pay, the Resolution Foundation has warned.
As many as 600,000 more 18-24 year-olds could become unemployed over the next year, the economics think tank said, on top of 408,000 in the age group who are currently out of work.
An estimated 800,000 school and university leavers are preparing to enter the workforce at a time when almost no companies are hiring and many are expected to lay off employees.
The Office for Budget Responsibility watchdog has set out a coronavirus scenario in which unemployment spikes to 10pc. Based on this, the foundation said the current crisis could slash the chances of lower-skilled young workers finding a job by more than a third years into the future.
Graduate pay could fall by 7pc while lower qualified workers could see pay cuts of as much as 19pc compared to the pre-crisis trend, the Class of 2020 report said.
The employment crisis is most acute for young people. A year after leaving education, more than a third of non-graduates and over 20pc of graduates work in sectors hit hardest by the lockdown, such as retail, hospitality, travel and entertainment.
Resolution said: "It is so far unclear when, and to what extent, these sectors will recover."
The foundation has called on the Government to set up a job guarantee scheme under which public and private sector employers offer temporary paid work to unemployed young adults, with wages backed by state cash.
Kathleen Henehan, Resolution’s research and policy analyst, said: “The ‘corona class of 2020’ could face years of reduced pay and limited job prospects long after the current economic storm has passed, unless the Government provides additional support – and fast.
“A new maintenance support scheme could help thousands stay in education and build up their skills, while those entering the labour market for the first time should be supported by a job guarantee offering critical employment experience.”