15 October 2020

The number of people out of work reached 4.5 per cent in the three months to August, with redundancies reaching their highest levels since 2009, according to the Office for National Statistics (ONS).  

Around 60 per cent of those newly out of work – some 300,000 of the 500,000 people who have lost their employment since the start of the pandemic – are young adults aged 16-24.

That’s a “really disproportionate” number, ONS’s deputy national statistician, Jonathan Athow, warned.  

The news comes just a few weeks before the end of the furlough scheme, which is still supporting some three million recipients. It will be replaced by the new job support scheme (JSS) which dials back on state support.

Initially revealed last month, with chancellor Rishi Sunak announcing extra measures at the end of last week, it means that from 1 November, there will be a two-pronged deal designed to “support only viable jobs”.

The original furlough scheme provided 80 per cent of an employee’s income while they could not work due to the pandemic. The government paid 60 per cent of the bill while the employer paid 20 per cent and the staff member took a 20 per cent hit on their pre-Covid salary in a bid to prevent millions of people being made redundant at the same time as the nation shut down.  

Though the number of people claiming universal credit after losing their job soared in the early days of the pandemic on UK shores, independent experts broadly agree that it softened the blow significantly.

But it couldn’t last forever.  

For those whose roles are still largely on ice, but which still have long term viability, the employee will now be expected to work and be paid for at least a third of their contracted hours. The government will cover a third of the remaining unpaid hours up to a cap of just under £700 a month and the employer will cover another third. That should all add up to at least 77 per cent of the employee’s pre-Covid salary for the next six months.

The employee will see their income drop a little more, but the biggest shift will be in the amount businesses will have to find. It may prove an untenable position for many, particularly the smaller businesses that form the backbone of the British economy.  

Influential think tank the Resolution Foundation warned this part-time JSS plan wouldn’t significantly reduce the rise in unemployment.  

Then last week, in preparation for introducing new tougher measures in areas with dramatically rising Covid cases, the chancellor revealed that businesses which are asked to close as a direct result of the battle against Covid will be eligible for a lockdown version of the JSS. This would see the government pay 67 per cent of employee wages in businesses such as pubs and restaurants, to a maximum of £2,100 a month, with no obligation for bosses to top that up. 

Even those that are eligible for the maximum state funding while they wait for their job to kick back in will probably receive just two-thirds of their pre-Covid salary and, crucially, that includes vast swathes of workers whose full salary had only been the minimum wage in the first place.

From the start of the economic reaction to the pandemic, it was clear that some demographics would be hit harder than others, particularly women and younger adults – those more likely to be in lower paid positions in the retail and hospitality industries.  

Centrepoint, working with the Co-op Bank, has now warned that fewer than two in five young people currently furloughed think their role would be eligible for the new JSS at all. Less than a quarter of the 16-24-year-olds currently on a payroll think their job is “safe”.  

This week’s official figures show they’re probably right.  

With little or no financial buffers, a third of the nation’s young adults now don’t think they would have a safe place to live if they didn’t get additional support, Centrepoint has found. Many are already relying on family and friends who are themselves employed in insecure jobs.

Eight in every ten councils in England have already seen an increase in homelessness in their area since the start of the pandemic and Centrepoint predicts that, eventually, two-thirds of under-24s would need to rely on support services to meet their financial obligations if they lost their main source of income.

“While the uncertainty and disruption of the past six months has impacted everyone in some way, this research clearly indicates the severe effect it has had on young people,” Seyi Obakin, chief executive at Centrepoint, says.  

“As we move into the winter months, and as the government furlough scheme winds down, the risk of a dramatic increase in youth homelessness is very real, exacerbated by the existing financial and employment insecurity of young people.”

Commenting on the expansion of the JSS for local lockdown areas, TUC general secretary Frances O’Grady said:

“This scheme will protect jobs in businesses forced to close by local restrictions. But ministers still need to do more to stop the devastation of mass unemployment.

“Firms which aren’t required to close but will still be hit by stricter local restrictions need a more generous short-time working scheme. And there needs to be extra help for self-employed people in local lockdown areas too.  

“Nationally, industries like the arts, hospitality, retail and aviation face a long, tough winter. These sectors need targeted help. And we need proper investment to create good new jobs in the green tech of the future.”

Source: The Independent