Labour Market Scarring and Youth Unemployment

Posted on Friday, 8 October 2021
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A recent report from the Parliamentary Budget Office (PBO) highlights the impacts of Covid-19 on unemployment, particularly youth unemployment, and warns that the "withdrawal of income supports could lead to a labour market with greater demographic inequality, rising poverty, and fewer jobs".  

Our Employment Monitor, published in May 2021, analysed data from the CSO Labour Force Survey Series in December 2020. This found that of those who do not expect to return to their previous job, 111,940 are between 15-34. We are facing a major explosion in youth unemployment – which was already underway before the pandemic. Older workers, those aged 60-64, have also been disproportionately affected, with more than one in five of the 72,322 workers affected not expecting to return to their job.

Sectoral Job Losses

The Employment Monitor shows that the sectors with the highest proportion of workers who do not expect to return to their job were Information and Communication (31.5%); Administration and Support Service Activities (17.7%); and Professional, Scientific and Technical Activities (17%).

Regional Job Losses

Dublin is set to have an unemployment rate of 21%, almost 350% its pre-pandemic unemployment rate. All other regions will likely double their pre-pandemic unemployment rates. 

At the beginning of the last recession, certain regions experienced a notably worse unemployment situation than others. Once the economic upswing began, Dublin and the Mid-East of the country experienced accelerated employment growth compared to the rest of the country. By contrast, the West, South-East and Midland regions experienced a notably higher unemployment rate over a longer term. This raises two issues when we consider the regional spread of those who do not expect to return to the same job post-Covid-19:

  1. The sustainability of jobs created in Dublin following the crash in 2008.
  2. The timeframe for recovery of the regions most affected by job losses post-Covid.

Interestingly, the region with the lowest unemployment rate forecast, the Border region, also is the region with the highest poverty rate, showing again that while it’s good to have a job, it doesn’t guarantee freedom from poverty.

While many employers are experiencing staff shortages, there will be a very large group wanting to work who will need upskilling and retraining to fill the vacant positions. It is essential that policy initiatives are taken immediately to address this situation.

Social Justice Ireland’s policy proposals include: 

Sectoral Policies

  • Resource the up-skilling of those who are unemployed and at risk of becoming unemployed through integrating training and labour market programmes.
  • Launch a major investment programme focused on prioritising initiatives that strengthen social infrastructure, including a comprehensive school building programme and a much larger social housing programme.

Gender-Related Policies

  • Adopt policies to address the obstacles facing women when they return to the labour force. These should focus on care initiatives, employment flexibility and the provision of information and training.

Age-Related Policies

  • Adopt policies to address the worrying issue of youth unemployment. These should include education and literacy initiatives as well as retraining schemes.
  • Invest in human capital through targeted education and training programmes, especially for older workers and those in vulnerable employment.
  • Including older workers in traineeships and other active labour market programmes is an important policy tool (OECD, 2014). In this regard it is important that the age profile in the Action Plan for Apprenticeship 2021-2025, launched in May 2021[1] is expanded and open to all age groups.

Regional Policies

  • Invest in up-skilling lower-skilled workers in rural regions, which has a greater impact on regional economic development than investing in increasing the number of highly skilled workers there (OECD, 2014).
  • Focus investment on education and training for people in low skilled jobs or those unemployed in rural areas as part of an overall regional employment strategy aimed at generating sustainable jobs.
  • Invest in the roll-out of decent broadband and transport systems to enable rural dwellers, particularly those on low incomes, to access education and skills development opportunities.

General Work-Related Policies

  • Recognise the challenges of long-term unemployment and of precarious employment and adopt targeted policies to address these.
  • Expand funded programmes supporting the community to meet the growing pressures throughout our society.
  • Establish a new programme targeting those who are very long-term unemployed (that is, 5+ years).
  • Ensure that at all times policy seeks to ensure that new jobs have reasonable pay rates, and adequate resource are provided for the labour inspectorate.
  • Adopt policies to address the working poor issue including a reform of the taxation system to make the two main income tax credits refundable.
  • Develop employment-friendly income tax policies which ensure that no unemployment traps exist. Policies should also ease the transition from unemployment to employment.
  • Reduce the impediments faced by people with a disability in achieving employment. In particular, address the current situation in which many face losing their benefits, including the medical card, when they take up employment.


[1] Further information on this is available at