Jobs crisis demands more boldness from Rishi Sunak – Rebecca McDonald

IT can take time for official statistics to catch-up with the reality of a crisis. Last week, the unemployment rate stayed the same for another month, despite the UK being in the most severe economic downturn ever recorded.
What more can be done to stimulate the economy and, in turn, jobs?What more can be done to stimulate the economy and, in turn, jobs?
What more can be done to stimulate the economy and, in turn, jobs?

For those of us watching friends or family lose their jobs, this quirk in the figures – caused by a combination of furloughing and people not looking for new work – isn’t fooling anyone.

We are starting to see the effect of this crisis feed through in the numbers. We now know that in July there were nearly three quarters of a million fewer people in paid work than back in March, with the UK seeing its biggest drop in working hours ever recorded. The most vulnerable so far are the youngest and oldest workers, the self-employed and those working part-time.

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Those without work face weeks, perhaps months, of uncertainty. Many will have to borrow from family, or cut back on food and essentials, to cover the bills until they find a new job. We won’t all have the same experience of the months ahead. A family in Scarborough will face different challenges to one in Skipton or Scunthorpe, as each town recovers at its own speed.

Will the reopening of pubs have a lasting effect on the economy?Will the reopening of pubs have a lasting effect on the economy?
Will the reopening of pubs have a lasting effect on the economy?

A rare green shoot was hoped for in July as much of the high street reopened. The return of shopping and eating out did spark a mild bounce-back in job vacancies and pay fell less than in the initial months of the crisis, but it’s still too early to know if socially distanced trading will prevent significant job losses in these sectors.

This stems from the fact that the latest figures cover a period when the full furlough scheme was still in place. Now, as it starts to unwind, there is a real risk a wave of unemployment could hit. Next month’s employment statistics could tell a much more worrying story.

The Government’s response so far has been bold and compassionate. The furlough scheme has protected millions from the full force of the economic storm and a temporary boost to benefits has been a vital lifeline for those who lose work and pay.

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As the job retention scheme is drawn to a close, the next phase of support must be just as bold. The good news is that it is possible to act now to limit the impact of the downturn on people’s incomes.

Chancellor Risihi Sunak's handling of the economy continues to be praised.Chancellor Risihi Sunak's handling of the economy continues to be praised.
Chancellor Risihi Sunak's handling of the economy continues to be praised.

The Government is right to expand their approach from protecting jobs to creating new opportunities and supporting people access them.

It is essential the response is now as targeted as possible, prioritising the people and places most at risk. The current focus on creating jobs and training opportunities for young people, for example through the Kickstart scheme, is necessary given they are more likely to be out of work, but there are other groups to also prioritise.

First, adults over 25 with few formal qualifications are vulnerable because of the risk to lower-skilled, more routine roles. There is currently less help on offer to a 40-year old warehouse operative made redundant and looking to retrain. The Government should ensure they also provide policies tailored to the needs of this group of workers as they hone the design of their employment support and training schemes.

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Second, some parts of the country will need additional support. Recent analysis by the Joseph Rowntree Foundation identified the towns and cities likely to suffer the most from unemployment and find it difficult to bounce back with new job opportunities. Hull was one of them, with its high concentration of jobs in badly hit sectors like manufacturing and retail. Devising a one-size-fits-all national strategy will not be enough to overcome the challenges specific to these places.

Tailored, additional support can be provided using the much-promised Shared Prosperity Fund to boost employment and opportunities in our weakest economies. These policies will take time to work and many will still lose jobs. In the meantime, it is essential that Universal Credit can support people’s incomes, tiding them over until they can access new opportunities.

Even with the temporary uplift in benefits, many families are having to turn to food banks or unaffordable loans to get by. Greater investment is needed to protect them and ensure that others are not pulled into poverty when they lose their jobs.

The Government has shown its commitment to do whatever it takes to support workers through this crisis. Now the first phase of its response is ending, this bold approach must continue to prevent a surge of unemployment trapping more people in poverty.

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Rebecca McDonald is a senior economist at the York-based Joseph Rowntree Foundation.

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