Kickstarting the labour market?
The Institute for Employment Studies’ (IES) "Labour Market Statistics" for August make rather grim reading. To quote from the report;
“All told, there are likely to be around one million fewer people in paid work in July than in March”
This is of course further evidence of the impact of the UK’s recent nationwide lockdown on the working population. The fact that the above figures have not worked their way into the official government numbers as yet is because so many of this grouping still have jobs that they expect – or perhaps hope – to return to, so are not yet actively registered as seeking a new job.
Clearly unemployment is set to be a major problem for the nation, businesses, and (of course) those unfortunate individuals and their families who find themselves without employment and income.
And it has all come about so suddenly too. At the start of the year – and indeed for several years previously – the UK was experiencing an incredibly strong period of often record employment levels. Indeed employers in some sectors were struggling to find suitable candidates to interview, let alone to actually accept their offer of employment. So this dramatic change in labour market supply and demand is likely to take some getting used to for all parties.
Which groupings are most at risk?
The IES also sought to shine a light on the demographic groups that are most likely to be impacted by this downturn. In geographical terms it continues to be the inner cities (particularly in London), ex industrial areas, and coastal towns that are perhaps most likely to continue to face a difficult future in the months and years immediately ahead.
The report also highlighted that two age groups – at either end of the age scale – are at most employment risk from the crisis.
It appears that those workers aged over 65 are particularly exposed to this downturn, with many being forced into involuntary retirement as a result.
And at the other end of the age scale there are worrying signs that younger people are being particular hard hit, with nearly one in seven now claiming unemployment-related benefits – a huge increase from the one in fifteen figures before the crisis began.
Time for a kickstart?
This is why the Chancellor of the Exchequer’s recent announcement of the “Kickstart” jobs scheme for young people has the potential to be so important right now.
The scheme, which is due to welcome its first placements in November, aims to provide 6 month work placements for young people aged 16-24 who are claiming Universal Credit and at risk of long term unemployment. The government has earmarked a cool £2bn to support this challenge, and will meet the full cost of 25 hours a week for each placement at the appropriate level of National Minimum Wage payable, plus associated costs such as Employer’s National Insurance and Auto-Enrolment pension contributions too.
The new guidance suggests that the government are in fact going further than the Chancellor’s initial announcement by offering an additional £1,500 per placement to employers to cover “setup costs, support, and training”.
Of course there are conditions on this proposal, the chief of which is (understandably) that each placement should not replace existing or planned vacancies, or cause existing employees or contractors to lose or reduce their employment. In addition the employer is expected help the scheme participants to learn new skills, including support in looking for work. And, as I suggested in my July post on this topic, it might well be prudent for employers to provide at least a basic level of Employee Benefits and Financial Education support to these workers too.
It remains to be seen how successful this scheme will be, but it seems clear that it may well provide some of the youngest participants of the UK labour market with a very useful employment foothold in very challenging times. And employers shouldn’t overlook the possibility of finding some very suitable and worthwhile younger workers through the scheme at zero direct financial cost also.
For more information on any of the above topics, please speak to your usual Howden Consultant in the first instance, or visit our website for other contact options. For the latest details on COVID-19 & Employee Benefits provision please visit our coronavirus hub.
Steve is Head of Benefits Strategy, Howden Employee Benefits & Wellbeing, and is an award-winning thought leader on Pensions, Employee Benefits, and Human Resources issues. He is occasionally accused of making Employee Benefits interesting.
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