Coronavirus: Ministers urged to stave off ‘second wave’ of unemployment with major job creation plan
The Resolution Foundation predicts that one million workers currently on furlough could lose their jobs. (PA)
The Government must take drastic action to stave off a “second wave” of coronavirus-related job losses, a major think tank is warning.
The Treasury has said it will end the government’s job retention scheme, which has seen the state pay the wages of more than nine million workers during the crisis, in October.
But, in a new report, the Resolution Foundation urges ministers to “flip the Job Retention into a Job Protection Scheme” and subsidise the pay of people working in sectors worst-affected by the crisis until at least the end of 2021.
The think tank is warning that sectors such as hospitality, retail, leisure and tourism, will continue to be hit by social distancing rules for some time, leading to “significant job losses” in the “labour-intensive sectors”.
“Hospitality, for example, employs five times more people for every million pounds of output than finance and insurance, but faces higher costs and lower demand for a long time to come,” the Resolution Foundation says.
The think tank is warning that, without drastic government intervention, more than one million of those workers currently furloughed by their employers could lose their jobs.
As well as extending the wage guarantee, the report’s authors suggest the Government could offer a national insurance cut to firms that pledge to grow their workforce.
They also want to see public investment in new jobs, with ministers urged to prioritise retrofitting homes to make them more energy efficient and an expansion of the country’s social care workforce.
Young people should, the Resolution Foundation says, be offered job and training guarantees to avoid the “long-term scarring effects” of youth unemployment.
Launching the report, Nye Cominetti, a senior economist at the Resolution Foundation, said: “Britain is slowly emerging from the lockdown that brought the economy to a halt and sent employment tumbling. But we are a long way off returning to business as usual, and its jobs crisis is far from over.
“A second wave of unemployment later this year, following the phasing out of the Job Retention Scheme, could leave Britain with the highest unemployment levels in a generation. The Government should adopt a ‘Full Monty’ policy response to avoid this."
He added: "The success of the Job Retention Scheme in protecting family incomes has shown why it pays to be bold with policy decisions. That same ambition is needed in the next phase of the crisis."