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Covid's lost generation?: What this year's disruptions will cost Singapore's young adults, and what lies ahead for them
MARK Yeow is in his third year in university, but rather than make a dash towards graduation, he's mulling over whether he should take a leave of absence for one semester.
That would give him time to look for an internship - his third one - and gain valuable experience on the job.
"I would like to think that you'd get an additional boost in terms of your professional employability," says the business administration undergraduate from the National University of Singapore.
"At the same time, it's not a rarity that people would take an LOA (leave of absence) during their university time. A lot of my friends are doing it right now or in the past semester, so it's becoming a bit of a norm," he says.
This might also have something to do with the fact that some companies are now looking to offer slightly longer internships - of six months rather than three, he says, adding that this would allow them to build familiarity and add more value to the company.
But there's also another potential benefit in delaying graduation.
With the global economy battered by the Covid-19 pandemic and Singapore steeped in its worst recession since independence, well-paying jobs, or even jobs at all, for fresh graduates are harder to come by.
"It's come to a point where we're just looking for opportunities because you can put money, everything aside, but the concern is whether we can get these opportunities in the first place or not," says Mr Yeow, who's hoping to land a marketing role for a technology company.
To boost his chances, he's also taken on external classes in the areas of coding, digital marketing, user experience and interactive design - something that his peers in business school are also looking into.
Mr Yeow's concerns are reflective of a generation that has found their dreams unsettled by the coronavirus.
Sung-Eun Jung, an economist from Oxford Economics, points out that the disruption to education could slow down education for students compared to their seniors.
"This is across the board from elementary to college-level education. And the problem is likely going to be more pronounced for households that cannot afford more parental supervision, typically parents earning lower wages who cannot work remotely," says Ms Jung.
In Germany, Tilman Kuban, who chairs the youth wing of Chancellor Angela Merkel's political party, has even gone so far as to call the younger generation "triple losers" of the Covid-19 crisis, according to Bloomberg.
Apart from the disruption to their education, it's also costing them social opportunities and future benefits, as governments dip deeper into the coffers to support individuals and businesses through the pandemic and recession.
Singapore youths could face the same challenges, with having to support an increasingly ageing population potentially adding greater burden.
Euston Quah, Albert Winsemius chair professor of economics at the Nanyang Technological University, further posits that what makes young workers the biggest losers is that they have a longer horizon of career and working in general, which means their life-time earnings may be affected.
Starting out with a lower first wage is known to have a "permanent income effect", says Ms Jung.
A research paper from 2012 suggests that "unlucky graduates" entering the labour force during a recession suffer persistent earnings declines that last 10 years.
"Our findings paint an intricate picture of the effect of initial labour market conditions for college graduates in which very short-lived adverse labour market conditions have long-term effects that vary dramatically across the skill distribution," writes North American economists Philip Oreopoulos and Till von Wachter.
"A typical recession - a rise in unemployment rates by 5 percentage points in our context - implies an initial loss in earnings of about 9 per cent that halves within five years and finally fades to zero by ten years," they add.
Such graduates start to work for lower-paying employers, and partly recover and catch up with their "luckier peers" through a gradual process of mobility towards better firms.
Data from the Ministry of Manpower (MOM) shows that resident unemployment for professionals, managers, engineers and technicians (PMETs) under 30 rose marginally from 4 per cent last year to 4.1 per cent in 2020, according to advance estimates.
For non-PMETs, however, the figure is 10.5 per cent, from 8 per cent in 2019.
These figures come in higher than the overall resident unemployment rate. For PMETs across all ages, it rose from 2.9 to 3.5 per cent for PMETs, whereas for non-PMETs it went up from 4.7 to 6.4 per cent.
Indeed, economists tell The Business Times that young people who are not employed in white-collar jobs are far more vulnerable.
Paul Jackson, an economist from the National University of Singapore, says younger workers typically spend several years switching from one job to another as a way for them to find their best fit in the labour market, and this is typically more common among people without a college degree.
"By going to college and specialising in something, you kind of already narrowed down what you think is going to be a good fit for you and the labour market," he says.
In a recession, however, this process is interrupted in the early parts of a person's career, particularly for those in lower skilled occupations that may need more time to find the best fit.
But Walter Theseira, a labour economist from the Singapore University of Social Sciences, believes this could be a problem for university graduates too.
"There has been much concern about this, especially because we know that wage, skill and career growth is cumulative - if people don't gain the right experience and opportunities at the start of their career, there may be little way for them to catch up later," he says.
He adds that this could present long-term implications for Singapore's economy.
For example, in many technically-oriented fields, there is no substitute for the combination of a technical background and job experience, he says. This means that a mid-career graduate without the right job experience may not be regarded as employable in a more senior position, even if they have the correct technical background.
These issues have been very hard to study using standard labour market data, says Assoc Prof Theseira, because it is difficult to evaluate based on surveys or administrative data whether workers are "matched" for the job in terms of skills.
"The most serious implication is that we will not have a pipeline of local talent in mid-career and senior management positions," he says.
He adds that Singapore's problem is not a lack of talent, given that Singapore is a globally attractive work destination and is able to fill positions with high-skill immigration for the foreseeable future.
"Our problem is that it's easy to have a generation of Singaporeans in the workforce without the capability to take up middle to senior roles in more technical or specialised fields, if they either choose not to go into entry level roles in those fields to build up experience, or if they can't get those positions due to the economic crisis," he says.
Meanwhile, recessions and rising unemployment could lead to the problem of skill loss, says Asst Prof Jackson.
"When people are out of work and are unemployed, and when they eventually get a job again, the longer that they were unemployed, the lower the wage they're going to earn when they become employed again," he says.
"One of the reasons for that is their skills deteriorate while they're unemployed. So that's concerning because when you have an increase in unemployment like we saw with Covid-19, we have a lot of people exposed to skill loss while they're unemployed. That impacts the productivity of that person in the aggregate productivity of the economy as a whole," he adds.
But can all these be mitigated by government support?
In the past year, the government has set aside close to S$100 billion to rescue Singapore's economy, with measures focused on saving companies and jobs as well as creating employment and training opportunities.
All that support has DBS senior economist Irvin Seah convinced that the younger generation need not turn into a "lost generation", as he draws upon his memory of the situation during past recessions, such as the 1997 Asian financial crisis, the dotcom bust in 2001 and the 2003 severe acute respiratory syndrome outbreak.
"Bear in mind that back then, we didn't have so many government support measures. We didn't have the SGUnited Jobs and Skills scheme, we didn't have the Jobs Support Scheme.
"But yet, we're here, where we are today. I don't think we have lost a generation in the process," Mr Seah says, even as he acknowledges the challenges faced by younger job seekers today.
Besides, young people are more adept at picking up new skills and the lack of big financial obligations like mortgages is an advantage in their favour, he says.
As to whether the government can do more to support the younger generation, Mr Yeow says apart from subsidies for further training, the resources that go into supporting companies go a long way.
He says: "If you look at how the government has small business grants for startups and smaller companies, for example, that ends up creating opportunities for students looking for internships and experiences, and I do think I was a beneficiary of that."