Coronavirus is a public health crisis that, combined with the social distancing measures taken to protect health, is having a profound effect on our society and our economy. New data out today shows a sharp rise in unemployment by early April, an early sign of this impact.
There were more than 2 million claims for universal credit during March and April, with claims still running at more than double pre-crisis levels. The Coronavirus Job Retention Scheme (CJRS), which didn’t even exist back in March, now supports the wages of more than 7 million workers. Millions of young people have had their education disrupted and face a weakened labour market. We estimate that five years of employment growth has been wiped out in just one month.
These effects have been immediate, but their impacts will be with us for a long time to come. We face the risk that those out of work will lose touch with the labour market and that ongoing social distancing measures will make some businesses and jobs unviable. In any case, we are unlikely to want to go back to "business as usual" even if we can.
Coronavirus: Youth unemployment could rise by 600,000
This is a chance to grasp a once-in-a-generation opportunity to build a better society, with more opportunities for young people, reduced inequalities in access to work, and a world where work is always of high quality with scope for development.
That’s why the Learning and Work Institute has come together with eight other organisations – from research organisations to labour market experts, and those representing providers – to call for urgent action to get Britain back to work.
Coronavirus: Getting people back into work
Our joint report calls for four areas of action.
First, we need to take care as we withdraw emergency support. Withdrawing the CJRS too quickly would cause a second spike in unemployment, and keeping it too long would prevent businesses and people making the transition to whatever our "new normal" looks like. We argued for support to be extended, made more flexible to allow furloughed workers to work part-time, and targeted on those sectors and firms where it is most needed. We could also bridge to the future by making future support contingent on paying a living wage and signing up to good work standards.
Second, we need to help those newly unemployed back to work quickly. Such is the spike in unemployment that we think that could cost up to £800 million – a lot of money but a drop in the ocean compared with the £14 billion per month cost of the CJRS. Jobcentre Plus can’t do it on its own – it would need 60 per cent more work coaches than it has today. So we should harness the best in existing provision and recruitment agencies, as we did in 2008. There will still be jobs available. But social distancing changes will demand more online support and change the sectors that jobs are available in.
Third, we must make sure that those who were furthest from the labour market when the crisis started are not left even further behind. We are likely to see an increase in long-term unemployment, as many of those who were out of work at the start of the crisis, and some of those who have become unemployed since, will struggle to find a job in the aftermath. Scaling up provision for this group would cost around £2.4 billion, but it would more than pay for itself in the long run. We need to harness the best provision out there, and focus it on the needs of employers.
Fourth, it’s time to ensure that all young people have a job or training offer. We need that to avoid a "pandemic generation" with disrupted education and poorer job prospects. So let’s take this chance to accelerate progress to more young people improving their skills, working toward level 3 qualifications and finding work.
We argue that this should be underpinned by a job guarantee, building on the Future Jobs Fund, which independent evaluation showed made a difference in the last recession for those that don’t find work quickly. That could cost £1 billion, but, again, it would more than pay for itself, and the social and economic cost of not acting would be far greater still.
Tearing up the rule book
The past few weeks have seen unprecedented times lead to unprecedented action – the rule book has been torn up. Even once the worst of the virus has passed, its effects will remain with us.
The challenges are enormous, but we can tackle them. As well as responding to the immediate emergency, we should also set a higher ambition to address the challenges that predated this crisis. But government cannot do this on its own: we need a partnership for jobs and skills with national and local government working together with employers, housing associations, providers, civic society and others.
We must plan now to build a better tomorrow.
Stephen Evans is chief executive of the Learning and Work Institute