With jobless numbers likely to be double those after the financial crash, it’s time we turned attention to unemployment. How will support agencies respond? And how will government ensure entrenched worklessness does not take hold of the most vulnerable?
The coronavirus has triggered the largest employment crisis we’ve seen since the Great Depression in 1922. Back then, at its peak, the UK’s unemployment rate stood at ten per cent. Recent forecasts suggest that this year’s figure will surpass that – a frightening prospect for all of us and a daunting one for those whose job it is to find a solution. During the most recent recession, 2008-10, half that number (4.9 %) of adults claimed unemployment benefits (in the peak months of October 2009 and January 2010).
The latest figures from the ONS are bleak. Between March and May 2020 we have seen the largest annual increase in the number of people claiming unemployment benefit since records began. There are now 2.8 million people out of work, and this figure is set to rise further in the coming months. At least some of the 8.9 million furloughed workers will be unable to return to their jobs when the scheme is withdrawn at the end of October.
FROM RISK TO RETURN
Since the start of 2020, all eyes have been on the pandemic. Until recently, the global response to coronavirus has all been around public health. But now the government is offsetting this risk against the need to kickstart an economy on its knees. As the furlough scheme ends and industries struggle to open their doors, unemployment levels are expected to be the worst in living memory. What can be done? And what is at stake for the most vulnerable in our communities?
We can expect economic activity to fall sharply, unemployment to rise sharply and particular groups and places to be disproportionately affected…
Lord Kerslake, member of the Covid-19 Housing and Employment Taskforce
Most at risk seem to be the young and vulnerable. There has already been a sharp increase in the number of young people, aged 18 – 24, claiming unemployment benefits. In just two months between March and May, the figure doubled from 238,100 to 498,300. This group fared worse after the financial crash and little has changed to suggest it would be different this time round. In addition, more students than usual are likely to defer their places, due to on-campus distancing and ongoing health concerns, adding to the numbers looking for work.
For those people that have remained in work, many have seen a reduction in hours and therefore pay. Total hours worked have fallen by 260 million since March – the equivalent to 740,000 full-time workers. This is the biggest two month fall on record. With incomes down, pressure is on householders to stay on top of their finances. They will hope their hours are reinstated or they too will be seeking second jobs.
“For some people, eighty per cent of their salary has been the difference between being able to pay the bills each month and not,” said Seema Malhotra, Labour MP and Shadow Minister for Work and Pensions, speaking at a webinar hosted by the Learning and Work Institute (L&W) ‘Getting Britain back to work’.
RECRUITMENT SHUT DOWN
The number of job vacancies has also plummeted. April 2020 saw a sixty per cent drop from 800,000 to 300,000. Recruitment in the retail and hospitality sectors was reported to have more or less shut down in the three months of lockdown. One sector that appeared to buck the trend was agriculture, with farms calling out for more workers to keep up with demand for food, as well as the lack of migrant workers the industry relies so heavily on. In part, this was a result of limited numbers of migrant workers available with flights reduced and question marks over post-Brexit policies.
Looking ahead, the Office for Budget Responsibility (OBR) expects the education sector to be the most affected by the crisis, predicting a collapse of 90 per cent. Hospitality is next with a drop of 85 per cent. Health and social work sits at the other end of the scale, with the industry set to boom by 50 per cent. Some sectors including financial services and agriculture will be unchanged.
Feeling among colleagues in the employment and housing space is one of frustration and concern. “We are about to expect a job crisis bigger than the great depression and there has been no commitment to support people into jobs yet,” says Lynsey Sweeney, managing director of Communities that Work.
Joined by other key leaders and organisations, Sweeney has set up a group – the Covid-19 Housing and Employment Taskforce – to work with the government and policy makers.
Speaking in Parliament, Lord Kerslake, chair of Peabody housing association and member of the Taskforce, said: “We can see the impact of the first emergency very clearly but the full impact of the second is only just beginning to be felt. We can expect economic activity to fall sharply, unemployment to rise sharply and particular groups and places to be disproportionately affected…A major stimulus package will be essential to get the economy going again.”
As we begin to move out of the government’s furlough scheme, the Taskforce is calling for an investment on a similar scale (around £14bn per month) to help get people back into work.
Despite some positive moves being made in government, including partnerships forming between the DWP, MHCLG and Cabinet Office, the Taskforce is concerned by the lack of a clear strategy from the government.
“The DWP did an incredible job getting all the claims processed so quickly but there is little or no advice for people who are newly unemployed or looking for work,” says Sweeney. “The government needs to understand the urgency to act now. If they don’t we will have a similar scenario to the 1980s, when, to quote Alistair Darling, ‘people joined the dole queue and never came back’.”
A report published in May by organisations including L&W, Reform, Youth Futures Foundation and others, sets out five key actions to get Britain back to work. These include careful withdrawal of emergency support (Coronavirus Job Retention Scheme) to avoid a second spike of unemployment; rapid back-to-work support for those newly unemployed; targeted support for the long-term unemployed; education and promise of employment for young people; and building for the future, ie, ways to increase access to well paid, high quality work based on understanding how our labour market will look in the future.
There has been much talk of the ‘green economy’ and the opportunities for job creation, however, so far there has been no commitment from the government: “They [government] have to set some of the direction on this so it is clear for local partnerships where they need to invest. Employers need to be involved too,” said Malhotra.
Malhotra stressed the importance of making use of our existing employment support structures and ensuring they are scaled up to size, to deal with the crisis. She added that as well as a national framework, there needs to be a budget for Local Authorities to develop plans and invest early. The employment sector is also urging job centres and out-sourced partnerships to work collaboratively, not competitively, in order to solve the crisis.
There is also the ongoing issue of digital poverty, which needs to be addressed now, more than ever, if we are to succeed in getting people back into work. Lockdown has changed the way we work and any new jobs will function differently to how they did before. People entering the job market will need retraining and education, otherwise many will be excluded.
“We would like to see this (the digital service divide) addressed in line with the decarbonisation agenda. This will mean infrastructure companies teaming up with mobile technology firms for private supply of kit, cheap tablets, and training for working age people,” says Sweeney. “We’ve got to stop the rot and act now so that people who find themselves unemployed don’t stay unemployed for long. No government can do it alone.”
Read Quids in! Editor, Jeff Mitchell’s blog ‘Drafting in the Reserves’ on how lockdown offers surprising work opportunities for unemployed people.
