Young people who entered Britain's labor market amid the 2008 financial crisis are still "scarred" by its impact on their employment and earnings potential, researchers found.
The so-called "crisis cohort," who entered the world of work following the financial meltdown of 2008, have continued to face higher unemployment, lower pay and worse job prospects more than a decade later, according to a new report.
Published Monday by British thinktank the Resolution Foundation, the study says that while the U.K. avoided a repeat of the mass youth unemployment seen in the 1980s, the impact of the financial crisis was "spread more evenly across young people," mostly in the form of a prolonged squeeze on pay.
Low-skilled workers who left education during 2008 and 2011 were 30% less likely to find employment than before the downturn – and researchers claimed the effect lasted for almost a decade. However, the report noted that the lowest paid were afforded some protection by the minimum wage.
Meanwhile, graduates who entered the U.K.'s labor market during the same period were a third more likely to be in low-paid work up to seven years on from the downturn. This group of graduates were paid 6% less than graduates who entered the workforce before the downturn, according to the report, with their wages taking up to seven years to recover.
"This matters because time spent in low-paying occupations reduces someone's future earnings prospects, not just because pay progression is weaker in these occupations but also because moving to higher-paying occupations is relatively rare and pay effects do not immediately unwind when (and if) someone does," the report said.
The Resolution Foundation urged policy makers to focus on the lasting effects of the financial crisis on young people's prospects, adding that U.K. lawmakers should be preparing for the next economic downturn.
Stephen Clarke, senior economic analyst at the Resolution Foundation, said in a press release Monday that people who entered the world of work amid the crisis were still facing "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," he said. "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."