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The United Kingdom is entering a period of high unemployment with stifled job creation. The government's response to the unemployment crisis so far relies on a quicker bounce back in economic activity than either the Office for Budget Responsibility or the Bank of England are predicting.

No plans have been put in place to protect jobs or businesses in the event of future local lockdowns once the government’s Job Retention Scheme (JRS) ends, or indeed if there is a second wave requiring national lockdown measures.

For many people in this crisis, the state has not been able to insure them against sickness and sometimes catastrophic falls in income. Our social security system should be acting as an ‘automatic stabiliser’ in this recession, smoothing incomes and helping to maintain a level of demand in the economy. However so long as benefit levels are low and coverage is poor, it will not fulfil this function. While this is a comprehensive challenge and will be the focus of forthcoming work from IPPR, the government can and must go further to prevent growing debt and destitution in this crisis.

Key findings:

  • The government's JRS will come to an end before the economic recovery has begun to take hold. We find that three million of the estimated four and a half million jobs currently still being supported by the scheme may still need that support in October, because of a continued shortfall in demand.
  • The authors estimate that one million jobs currently being supported by the JRS could be lost permanently, in the sectors most heavily affected by the crisis so far, such as hospitality, retail, entertainment, manufacturing, support services and construction. However, we also find that around two million of the jobs would be viable if wage subsidies were extended into the new year.
  • Those facing the greatest disadvantages are most at risk of being made redundant. Disabled people, carers, those in the shielded group and those with caring responsibilities are all significantly more likely to be in formal or informal stages of redundancy proceedings than the general population.

 

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CC BY-NC-ND