Why we need an ambitious new jobs guarantee – Kathryn Mackridge

The government can stop the Covid-19 crisis turning into an unemployment crisis

Extend current measures to protect livelihoods

As the government considers how best to ease the lockdown restrictions, we know there will be no return to “normal”. The future of the economy looks bleak . Some people will lose their jobs because of the pandemic. Some, unfortunately, already have.

The priority must be to extend and adapt the Job Retention Scheme (JRS) beyond lockdown. The government must not let the good work of the scheme in preventing redundancies go to waste. The scheme must be flexible enough to facilitate a safe and phased return to work, allowing for short-time working, and ensure adequate financial support for those who cannot return, such as those self-isolating, shielding or caring for children and vulnerable people.

But what about the sectors hardest hit by the shutdown? Hospitality, entertainment, and non-food retail, which rely heavily on footfall, cannot operate safely in the immediate future. To avoid a surge in unemployment, the government must bridge the gap in transitioning out of lockdown and guarantee a job for everyone who needs one.

Young people are the hardest hit

The sectors most impacted by the lockdown are likely to employ young people – two and a half times more likely than other age groups , according to the Institute for Fiscal Studies. This mirrors TUC research in 2018 which found young workers are already hardest hit by wage stagnation, overrepresented in low-paid sectors such as hospitality, working on insecure contracts, with few opportunities to progress.

And many of these young workers came into the labour market at a time of high youth unemployment. The 2008 financial crisis and subsequent recession significantly affected young workers’ employment prospects, with the unemployment rate for 18-24-year olds reaching a much higher peak than for other age groups.

While unemployment negatively impacts on individuals (and the economy) at any age, the long-term impacts of unemployment can “scar” young people’s prospects and earning potential more profoundly than those experiencing unemployment later on in life. It is therefore vital this group do not face another catastrophic hit to their employment prospects.

A job guarantee scheme can bridge the gap

A job guarantee scheme is one way the government can prevent the current crisis becoming an unemployment crisis. These schemes work. A government evaluation of The Future Jobs Fund – set up in response to the last recession but scrapped by the Conservative-led government – showed the scheme delivered clear benefits for participants, employers and society .

Drawing on the successes of similar job guarantee schemes, our new report proposes a government funded scheme that offers jobs that:

  • are a minimum six-month job with accredited training, paid at least at the real living wage, or the union negotiated rate for the job, whichever is greater
  • are offered to as many people as possible who face long term unemployment – but prioritise young workers and those facing unemployment of six months or more
  • are additional, so workers are not displaced
  • provide a community, public benefit and/or help to decarbonise the economy, ensuring new jobs contribute to rebuilding the country
  • meet local labour market needs
  • promote and protect equality

The government can – and should – be ambitious

Polling by YouGov at the end of April showed most people are in favour of some form of jobs guarantee . The government can use this as an opportunity to be ambitious, encouraging the creation of sustainable jobs in every part of the country, addressing the threats of unemployment, labour market inequalities and the climate crisis together.

The scheme should be funded by national government, but delivered at regional, devolved nation and local level, with inputs from local leaders, trade unions and business, working alongside Jobcentre Plus. A new Corona Reconstruction and Recovery panel should be set up in each region to ensure an equal voice in decision-making. The government was already promising a significant investment in the future economy, with a pledge to put £3 billon into a new National Skills Fund and a new national prosperity fund to replace the EU structural funds. These commitments can help with the upfront costs of the job guarantee scheme.

We need to reform Universal Credit too

A job guarantee scheme is a vital part of a new plan for jobs. But it must sit alongside decent social security . Avoiding catastrophic falls in income avoids huge debt and protects against the worst impacts of unemployment. The basic level of Universal Credit and legacy benefits should be increased to £260 a week – 80 per cent of the value of the real living wage. And the government must provide decent sick pay for all by increasing the level of sick pay to the real living wage, and removing the earnings qualification that excludes two million people.

The immediate economic impacts of the pandemic do not account for the unknown but no doubt immense personal and economic cost coming down the line. Young people today are yet again facing an uncertain future, with unemployment risking further scarring to their pay and progression prospects, and struggling to make ends meet with a social security system not fit for purpose. The government took a hugely important first step to support workers’ jobs with the JRS. As the country seeks to recover, it is vital that the work done to protect workers jobs and livelihoods is not lost. The government must guarantee a job for everyone who needs one to get us through the tough period ahead.

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