Fewer young people report that they are 'living comfortably' than in April 2020, while more are finding their financial situation 'very difficult', according to our analysis of the latest Understanding Society data.
It is clear the Covid-19 pandemic is impacting young people's economic security, which is why we’re launching a new project to understand how economic insecurity affects those aged 12-24.
At the RSA, we believe economic insecurity is one of the most pressing challenges of our time.
It’s a concept we’ve been making the case to better understand and apply for several years, but one that does not receive the attention and urgency it requires in national discourse, policy and practice.
So what is economic security?
There is little consensus about what economic security is or exactly how to measure it. At the RSA, we define economic security as: the degree of confidence a person can have in maintaining a decent quality of life, now and in the future, given their present economic and financial circumstances.
We use this definition for a number of reasons:
- It is dynamic. Unlike other measures – such as poverty and inequality – which capture a person's financial situation at a static moment in time or relative to that of others, economic security captures the fluctuations in people’s circumstances and exposure to risks. Concerned with the range of possible outcomes that might result from a person’s situation today, it links the present to the future.
- It goes beyond income and employment status, which can be blunt measures of someone’s financial circumstances. Instead, economic security encourages us to consider how a person's assets, resilience, wider household circumstances and access to support shape their situation.
- It centres the subjective. Concerned with a person’s confidence, it places significance not only on realised, objective insecurity, but also on perceived or anticipated insecurity, as it is experienced by the individual. Both objective and subjective security shape a person's aspirations, how they make decisions about their future and how able they feel to take positive risks.
Because of its breadth, our characterisation of economic insecurity captures the experiences of a large – and growing – proportion of the population. It affects not only those who are trapped in cycles of structural poverty or worklessness, but also those who live with uncertainty that they can make ends meet from month to month or in fear of an unexpected bill or cost.
As more people face economically precarious lives, most of us will experience economic insecurity, to some degree, at some time in our lives.
We think of economic security as being shaped by a range of component parts, each of which directly or indirectly affect a person’s financial circumstances in both the present and future. These include (but are not limited to) work, housing, education and training, and access to support, whether from welfare, family or community.
These interact in complex ways and can create a vicious cycle of economic insecurity.
For example, loss of work, rent increases or overlapping deposits when moving house can reduce disposable income, making it harder to save or avoid falling into debt. A shortage of jobs or rising housing prices in an area can force relocation, leading to a loss of support network. Income volatility or a growing family can discourage taking positive risks, such as retraining or returning to education. Financial and housing insecurity can place strain on relationships and self-esteem, affecting the mental and physical health of individuals and families.
For young people, likely in education, entering the workforce and living independently for the first time, economic insecurity is experienced in disproportionate and unique ways.
The Covid-19 crisis has cast a spotlight on how exposed young people are to a wide range of insecurities. While they may be less vulnerable to the health effects of the pandemic, young people have fared worst in terms of work, training and housing.
Under-25s are more likely to have been furloughed and to have struggled to find employment after losing their job due to the pandemic. They have also faced a decline in the number of apprenticeships available, experienced upheaval and government U-turns over their education, and have lived through lockdown in the smallest homes.
But these are not new issues, just extreme symptoms of a policy environment that is hostile to young people.
For many years, young people have been the most likely to experience insecure employment contracts and working in the gig economy. Lower minimum wage guarantees and, for those renting privately, access only to the lowest level of housing benefit, have restricted the safety net available to young people. Meanwhile, the Coalition Government’s scrapping of the Education Maintenance Allowance and hiking up of university fees have made participation in post-compulsory education a financial risk for many.
And the consequences of this unfavourable environment on young people’s economic security are evident. In a new report, the we identify seven distinct tribes of British society, each of which experience economic insecurity in different ways. One of these seven tribes is the ‘young precariat’. Around a third of this group are 18-24 years old, and a further third are 25-34 years old. They face some of the highest levels of economic insecurity despite working among the longest hours, and around half have an income that varies each month. 75 percent are worried about housing costs and 62 percent about the amount of debt they are in.
We know that young people face particular risk in times of economic downturn, with those leaving education during a recession more likely to face unemployment and long-term wage scarring for several years. Now, as the UK faces its deepest economic depression on record, we must protect and promote young people’s economic security, giving it the attention it demands but has too often lacked.
The RSA is embarking on a new piece of work to understand how young people experience economic insecurity.
Over the next two and a half years, we will be working on a new project, supported by The Health Foundation, looking at young people’s economic insecurity and how it affects their present and future health.
We want to understand how economic insecurity looks and feels for those aged 12-24 years old: how it affects decision making and behaviour, how it shapes self-esteem and relationships, and how it impacts their health as they prepare for, and transition into, adulthood. We want to know what drives economic insecurity among young people, who is most vulnerable to it and how it shows up in different places. And we want to work with young people, policymakers and practitioners to identify opportunities for change and co-design solutions.
This project forms part of a larger programme of work, the Young People’s Future Health Inquiry, led by The Health Foundation.
The RSA is part of a cohort of organisations exploringdifferent factors affecting young people’s future health: access to quality work - Institute for Employment Studies and Resolution Foundation - and transport - University of the West of England & Sustrans - and the inequalities faced by different groups of young people - Association for Young People’s Health.
Together, our aim is to amplify young people’s voices and place their needs at the heart of decision-making across a range of policy areas.
Stay up to date with the project, including upcoming opportunities to get involved, by visiting the Young people’s future health & economic security project page.
During the pandemic, many key workers have experienced impacts on their economic security, mental and physical health, working and home lives. These are just some of their stories.
Tackling economic security is the right political agenda. It’s good for key workers, it’s good for employers, and it’s good for the economy.
This report puts forward a comprehensive agenda to tackle economic insecurity in key workers and ensure they are properly supported to enjoy secure, healthy, fulfilling lives.