Disheartening and petrifying: The lifelong impacts of entering the workforce in recession

Thursday, 25 July 2024

“Everyone says they're hiring, but no one is hiring. You get an interview, they never call you back. And that happened for about 20 interviews I've done. That’s 20-year-old fashion student Fifi Albaloushi.

As inflation starts to soften, people aged 15 and 24 are still getting hit the hardest in the search for stable employment.

“I'm not even looking for a career right now because I'm still studying. That's the scary part because I already know what the job market is like,” Albaloushi said.

AUT Policy Research Institute director Gail Pacheco said people who entered the workforce during a recession often face a bigger power imbalance with their employer, which could make it harder to have leverage when looking for work.

“During a recession, the balance of power shifts more towards an employer,” Pacheco said.

“Research shows that graduates who enter a labour market during a recession experience long unemployment spells, end up in lower quality roles and there is greater skill mismatch.”

Last year, Albaloushi left a job in retail along with five other staff members due to poor management and mistreatment of staff led to six people resigning at the same time.

She found her current job in fashion design after seeing an advertisement for an unpaid internship on Instagram.

After moving up to a casual position, she said the recession hit the small business and led to fewer opportunities for her team.

“We saw the business thrive. Then towards the end of the year, it was just so different. We had so many slow days,” she said. “It’s petrifying.”

A post-pandemic economy

The institute’s deputy director Lisa Meehan said young people were at the mercy of a fluctuating job market after the pandemic.

“Businesses were struggling to hire enough people and this made them more willing to take a punt on young people who hadn’t yet proven themselves in the job market.”

“When the economy starts slowing down, young workers are often the first to lose their job,” Meehan said.

She said employers are more likely to take on young people with work experience and “proven employment track records”.

But Auckland barista Destiny Edwards said the labour market had been tough despite working in a range of jobs for almost a decade.

Edwards, 24, and has been working in hospitality and administration since she was 16, but has been hunting for full-time work since last August.

“I was applying for around 30 to 50 jobs every week,” Edwards said, with responses from employers few and far between.

“A lot of the time employers didn't look at my application at all.

“It’s frustrating for someone who needed to be employed,” she said.

Edwards got 10 to 15 responses after applying for “hundreds and hundreds of jobs” and finally landed a full-time role last month thanks to a family friend.

New Zealand Institute of Economic Research deputy chief executive and principal economist Sarah Hogan said the economy was still experiencing some long-term effects of the pandemic, “notably that high levels of government spending during the pandemic now make it more difficult for the Government to spend to support youth employment”.

“This may mean less Government support than would have been the case if the pandemic had not occurred,” Hogan said.

Sectors like retail and hospitality have not fully recovered from the pandemic, which could mean fewer entry-level jobs for young people than before the pandemic,” she said.

Mental health

Liv Hilton said it was a struggle to land a hospitality job in Wellington.

“I would consider myself to have fairly good experience in the workforce, especially since I've been employed in hospitality since I was 14,” the 20-year-old student said.

But she was still looking for a job that fitted around her study schedule.

“I've got my full licence, I've got over five years of experience and I still struggle to find work,” Hilton said.

She applied for 50 to 100 jobs before moving to Wellington in March.

“You can have a good CV and be skilled for the job, but the market right now is so oversaturated, especially in hospitality,” Hilton said.

“It can be disheartening when you have a fair bit of experience and you've handed your CV into over 20 places in one week.

“I feel it's becoming more common that people do go to university and there still may not be a job available for you,” she said.

Hogan said young people getting into the workforce in a recession often dealt with higher levels of stress from discouraging job searches and financial instability.

“Applicants [go] through many more job applications, often with disheartening rejections before even getting to an interview,” she said.

Significantly long periods of unemployment can lead to “material difficulties in rent affordability and the development of mental health concerns, such as depression”, particularly for young people who didn’t have family support, Hogan said.

“This can be particularly disheartening for those who have studied and gained qualifications they expected would lead to good employment prospects.”

Young people with longer periods of unemployment were also more likely to have ongoing physical and mental health issues, such as harmful alcohol and drug use, she said.

“The longer unemployment persists, the worse these impacts are.”

Interventions

The Government does fund interventions to support young people to get into employment and further training, Hogan said.

“[But] The real question is whether [the Government] is ramping these up in response to rising youth unemployment”.

“Incentivising people to work when there are no jobs to be had is going to be very limited in terms of effectiveness,” she said.

Starting last month, the Ministry of Social Development (MSD) requires people receiving the Jobseeker Support Work Ready benefit to attend a seminar to discuss how their job search is going after six months if their benefit has full-time work obligations attached.

“New requirements on beneficiaries to participate in various programmes designed to increase their chances of gaining employment may be seen as incentives, but are more likely to be seen as unfair punishment if they still can’t find work,” Hogan said.

Policies like no-cause evictions and slashing school lunches are likely to disadvantage students her age and younger, Hilton said.

Albaloushi said alternative streams of job hunting have been more helpful for her.

“I found Linkedin is really good. People have reached out to me and on there and asked me to meet them after I graduate,” she said.

But there was still an ongoing fear the economy would not turn around soon enough to create more opportunities.

Hogan said policies that support businesses and the economy could lead to more sustainable employment for young people, but this often took time and was unlikely to provide short-term relief from rising youth unemployment.