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Workers ‘scarred’ by financial crisis a decade later, report warns | UK News

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Graduates who started work in the middle of the financial crisis face higher unemployment, lower pay and worse job prospects compared to others, a study has found.

The Resolution Foundation said people who came into the jobs market during the 2008 downturn still face “significant scarring effects” more than 10 years on, at a time when many now have the additional financial strain of buying a home or bringing up children.

A report by the think tank said graduates finding work during the crisis had a 30% higher chance of being in a lower paid occupation a year after they left university.

Low skilled workers were also more likely to be unemployed if they left education during the downturn, it added.

Meanwhile, the wages of people who started work in 2009 may have still not recovered, with average earnings still less than those who left education in 1991, the study found.

Stephen Clarke, of the Resolution Foundation, said: “Britain was able to avoid a repeat of the mass youth unemployment scarring that characterised the 1980s in the wake of the financial crisis.

“But the ‘crisis cohort’ who had the misfortune to enter the world of work in the midst of the last downturn still faced significant scarring effects.

“Low-skilled workers faced a higher risk of unemployment, while graduates were more likely to trade down the types of jobs they did, with their pay and prospects stunted as a result.

“These scarring effects have stayed with the crisis cohort for up to a decade, reducing their living standards at a time when they may be facing the additional financial strains of buying a home, or bringing up kids.

“Politicians and policy makers owe it to those young people who leave education during downturns to mitigate the negative effects of this bad timing through active labour market policies, including targeted jobs support.”

The report focused on those who entered the workforce between 2008 and 2011.

Research has shown there is a wage penalty of approximately 6% for those who start work during a financial crisis, and that during the last one, workers found it took six years for their wages to recover.

The foundation discovered that those who entered the workforce in 2013 also had a relatively low employment rate, but found that it recovered within four years.

Those who entered work during the financial recession in 1991 had the lowest employment rate, followed by those who left in 2009.

The study found people with higher levels of education were also more likely to accept “worse jobs” than they may have in a more buoyant economy.

Responding to the report, the Department for Work and Pensions (DWP) said employment was at a “record high, with youth unemployment having halved since 2010”.

“We believe every worker should be in a job which reflects their skills and offers opportunities to progress,” a DWP spokesman said.

“That’s why we have announced two new programmes to be run from job centres examining how DWP can support people to change jobs and improve their pay, and work with employers to boost claimant’s career progression.”

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