Jobs, jobs, jobs: a hard winter beckons
Nowhere is this more important than in the jobs market. The crisis is fast moving so policy makers have to respond quickly but they are doing so in a vacuum because official data is out of date.
This week the think tank the Resolution Foundation published a report which aims to fill that gap. Jobs, Jobs, Jobs supplements existing data with a UK-wide survey which took place at the end of September. It lays out which groups have struggled the most, which are most at risk in the immediate future and what needs to be done to limit the damage.
It finds that the hardest hit of all have been the self-employed. This will be of particular concern in Northern Ireland where the number of self-employed increased by 14% in the past 15 years, and was at 134,000 before the pandemic struck. Of these 75% have no employees, with 21% in the construction industry and 14% in hospitality. There are also large numbers in farming and fishing.
The Resolution Foundation report shows that in every month since April, more than half of self-employed workers were receiving lower earnings than before the crisis. At its peak, three-in-ten were not receiving any pay at all, compared to just 4 per cent of employees.
By September the situation had improved but there were still 17% of self-employed not working in September and more than a half were still getting lower pay than before the crisis. Younger people and those with lower qualifications were the worst hit.
At first glance the government’s support package for the self-employed looks very generous. It has spent twice as much on the average self-employed worker (£2,518) than on the average furloughed worker (£1,291).
The trouble is that it has been so poorly targeted. The Resolution Foundation found that one in six people who claimed from the Self-Employment Income Support Scheme (SEISS) had experienced no loss of income. This unnecessary support cost the Treasury £1.3 billion. Furthermore although 78% of claimants had lost money in many cases the losses were lower than the amount claimed.
In contrast 500,000 self-employed workers who were still without work in September had received no support at all.
Ironically the problem stems from the scheme’s strict eligibility rules. The criteria around who could claim and how long they had to have been trading before they could were brought in to prevent fraud. Yet an unintended consequence has been to waste public money on people who did not need it.
If the system is to be extended further it will need to be reformed to ensure those who need support get it and that there is a more rigorous process in place to ensure payments made reflect income falls.
Government interventions managed to restrict job losses in the first phase of the pandemic. The latest official figures for June-August show unemployment at 4.5% yet the report provides evidence of sharp rises in September, suggesting the figure is now at 7% and rising as tighter restrictions start to bite. Sadly a further acceleration is inevitable.
Younger workers and the low paid were hit hardest in the early days, but now job insecurity has spread to all ages and all levels of pay.
More than a quarter of those surveyed in September said that they were worried about being made redundant, have been told that either a redundancy process either may or will happen or have been told that they will be made redundant. Unsurprisingly these fears are greatest in the hardest-hit sectors – the figure rises to 40% in hospitality, leisure and non-food retail.
Earlier this month government responded by increasing the generosity to firms of the Job Support Scheme (JSS), which will come into effect at the start of November. However the report findings suggest that for many employees this will come too late.
Policy-makers hope that unemployment in some areas by workers switching to other sectors where there are vacancies. However there is no sign of this happening just yet.
The report analyses job searches amongst those made redundant from hospitality, leisure or non-food retail it finds that the top four searches for these people are hospitality, leisure, non-food retail and administration.
So if government is wanting to encourage a shift it will need to do more than at present.
One striking example is social care. Between July and September there were more job vacancies advertised in this sector than any other. Yet only 17% of those surveyed said they would consider a job in this vital line of work.
This suggests a major challenge for policy-makers. It is further evidence of the need to increase the prestige and remuneration of the social care workforce.
There is something fundamentally wrong when people will prefer to seek dwindling opportunities as bar staff and shop assistants rather than enter a caring profession of such importance.
The report adds: “We find little evidence that huge numbers of workers being shaken out of the hardest-hit sectors are likely to be swiftly reabsorbed into other growing sectors before a vaccine or some other resolution to the crisis gives firms the certainty to invest. Indeed, there is some evidence that job losses may become more widespread across age and earnings groups. The task of policy against this backdrop is to therefore protect incomes of those most affected, limit the rise in unemployment and to enable people to play their part in suppressing the virus.”
To this end it proposes a number of steps:
A greater focus on supporting people to switch to growth areas in the economy;
Better paid social care jobs;
Creating jobs that deliver against our net zero ambitions;
Clearer communications to reduce uncertainty both around Brexit and the next phases of the pandemic to help the private sector plan for the future;
Improve financial incentives to self-isolate by raising Statutory Sick Pay and extending it the two million low earners who are not eligible;
Retain the £1,000 a year uplift to Universal Credit and Working Tax Credits which is due to be dropped in April of next year.
Government would be wise to take this report seriously and act upon it.
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