Costs of pandemic for young people to reach USD 44 trillion - report

The report broke down the costs of the COVID-19 pandemic for the young generation into 3 categories: education, the labour market and health. Tomasz Gzell/PAP

The findings of a report by the Polish Economic Institute (PIE) indicate that the global long-term costs of the Covid-19 pandemic for young people will total USD 44 trillion.

An analysis of the report entitled "Corona generation. Growing up in a pandemic," shows that the short-term costs, including costs related to mental health care and increased youth unemployment, will total USD 1.7 trillion.

However, the most important element of the estimated USD 44 trillion amount of long-term costs for the young generation will be the USD 21 trillion in lost future earnings, measured over the span of their working lives, that is, almost 45 years.

Other crucial components will be the costs of increased permanent unemployment, at USD 15.5 trillion, and a fall in the earnings of young workers, by USD 5.7 trillion, over the coming 15 years.

The report broke down the costs of the COVID-19 pandemic for the young generation into 3 categories: education, the labour market and health.

In the context of education, the pandemic-related educational losses are primarily due to factors such as temporary or permanent school closures, remote learning – which research suggests is a less effective form of teaching than traditional ones – and widened educational disparities between disadvantaged and more privileged social groups.

In terms of the labour market, the study showed that young workers have been particularly affected by the corona crisis. The report indicated that in 2020, the world's unemployment rate increased by 3.7 per cent, whereas youth unemployment rose by as much as 8.7 per cent.

Among those most vulnerable during the COVID-19 crisis are the 1.6 billion grey economy workers, who represent half of the global workforce and work in sectors experiencing major job and revenue losses.

According to the study, in 2020, the total financial costs for young people were USD 1.3 trillion, which corresponded to 1.5 per cent of global GDP.

In terms of an entire working lifecycle (45 years), young people will earn nearly USD 21 trillion less due to the effects of COVID-19 on the economy. University graduates will suffer the highest losses: USD 56,000 for men and USD 43,000 for women.

The report also noted that decreased mental well-being also entails measurable economic costs.

The overall annual increase in costs due to COVID-19-related mental health problems among young people is estimated at 0.49 percent of GDP worldwide, that is, USD 407 billion.

The report pointed out that the mental health condition of the young generation has been mostly hurt by reduced labour market opportunities, worsened prospects for stable employment, the consequences of social isolation and stress resulting from potential effects of becoming infected with the coronavirus.

The analysis was prepared by the Polish Economic Institute, a public economic think-tank. Its research spans foreign trade, macroeconomics, energy and the digital economy, with strategic analyses on key areas of social and public life in Poland.