The firm’s chief economist Jo Masters said for most people, their 20s was the period of largest growth in wages. Seventy to 90 per cent of their total lifetime income growth occurred in the first 10 years in the workforce.
She said overseas research showed people starting their working lives during a recession faced an initial earnings loss of 9 per cent that took about a decade to fade away. The cumulative loss is $32,000 for the average 21-year-old.
“While it might feel like Australia’s economy will bounce back once lockdown is lifted, that won’t change the impact the current recessionary job market will have on recent school or tertiary graduates,” she said.
Ms Masters said one way identified by the Reserve Bank for people to boost their wages was to move to new jobs.
She said if people made an extra job move in their first decade in the workforce, it could give them a 3 per cent income boost.
Young people could also cover the hit to their superannuation that will come from starting work during a recession by saving an additional $300 a year.
The independent Grattan Institute on Monday outlined a six-month intensive period of policy reform aimed, it says, at dragging unemployment to 5 per cent by mid-2022.
It said to avoid a severe “economic crunch”, the government needed to look at a fresh stimulus package worth at least $30 billion, with a focus on expanded services, infrastructure and social housing.
JobKeeper would be extended for three months for firms in trouble and withdrawn for those that no longer need it. There would be special tutoring for disadvantaged students left behind by recent school closures and the next planned increase in the superannuation guarantee would be abandoned.
The Grattan Institute also believes transparency around the national cabinet and parliaments needs to be increased given the large lift in government spending and decisions because of the pandemic.
“This is a huge agenda, almost all needed in the next six months,” the institute found.
“It will stretch government resources.
“Other less urgent but important reforms should wait until there is time and resources to do them properly.”
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Shane is a senior economics correspondent for The Age and The Sydney Morning Herald.