Labour market

Any further questions?

From 'The Full Monty: Facing up to the scale of the COVID-19 jobs crisis'


We often have more questions submitted for our event Q&A sessions than we’re able to answer. Where this is the case, we’ll endeavour to respond to a selection of the most interesting or most representative questions that went unanswered. The questions below were submitted to our panel for the event  The Full Monty: Facing up to the scale of the COVID-19 jobs crisis. Hannah Slaughter, co-author of the report The Full Monty, responds to these questions from our audience.

Disadvantaged young individuals are one of the worst-affected demographics. With so many experienced people being made redundant, what steps should we be taking to influence employers to invest in young NEETs rather than taking the ‘easy’ option of employing a demonstrably experienced individual?

It’s true that young people have been particularly affected in this crisis – our report shows that they’re twice as likely to have been furloughed or lost their job than workers in their forties. And this is particularly concerning because of young people’s risk of scarring, meaning that their employment and pay prospects can be affected for years to come by time out of the workforce early in their careers.

Given that young people disproportionately work in sectors like retail and hospitality (which explains why they’ve been hit hardest), our proposal to subsidise wages in these sectors through a new Job Protection Scheme will help many younger workers. But we’re also recommending targeted job guarantees for young people. There’s evidence of this working well in the past – for example, the ‘Future Jobs Fund’ that was successful in the aftermath of the financial crisis.

What role does investment in training have in supporting workers to reallocate to better paid jobs?

One of the reasons sectoral reallocation is likely to be so difficult (aside from the sheer scale of the expected job losses) is that the workers losing their jobs tend to have below-average qualifications – and low-skilled sectors are much less likely to be providing new opportunities, too.

The sectors we’ve proposed for large-scale job creation – social care and housing retrofitting – require few formal qualifications, meaning that workers will be able to move into them relatively quickly, although these moves should still be accompanied by comprehensive, job-specific training. In addition, some workers may choose to reskill. And younger workers due to leave education this year may choose to stay in a bit longer, particularly as the opportunity costs of more education are lower than normal given labour market weakness. For those workers, investment in training will be crucial – not just formal education, but job-focused and vocational training, too.

Some might argue there’s a trade-off between the quantity and quality of jobs created. Do you think that the recovery can provide both more and better jobs? And if yes, which are the key factors that would allow for such an outcome?

Job quality is definitely an important issue. In the decade following the financial crisis, two-thirds of the growth in employment came from ‘atypical work’, including self-employment, agency work, and zero-hours contracts – we can’t let that happen again. And the coronavirus crisis has highlighted the scale of low-quality jobs among key workers such as carers and delivery drivers. As we’ve argued before, now is the time to set out careful plans to improve the quality of work as the economy recovers, not least given the Government’s welcome commitment to a new employment bill.

Supporting the labour market to get back to full strength as quickly as possible will help to make sure that workers don’t have to put up with poor working conditions. But we shouldn’t be complacent: as the labour market reached record pay and employment in recent years, zero-hours contracts remained at an all-time high.

More targeted policy interventions will help, too. For example, the Government has some control over pay and conditions in the social care sector, given that it’s publicly funded. To reflect that, our costings for direct public investment in social care include increasing the sector’s pay to at least the real Living Wage, the voluntary rate that reflects the cost of living.

How might changes in the UK migration policy combine with coronavirus impacts on the job market?

Coronavirus has brought an abrupt halt to migration flows – but as you allude to, slowing migration has been a slightly longer-term trend, driven by policy decisions and the decision to leave the EU. The difference is that coronavirus has brought a much more rapid stop to the majority of migration flows than any policy change. There will definitely be impacts on the labour market as firms adjust in the new reopening phase we are now entering. In the medium term, the Government has committed to a new migration regime that will further drive down migration in lower-skilled, lower-paying work – i.e. the sectors most affected by the lockdown. We took a look at this issue back in April if you’d like to read more.

Do we have any understanding of how this crisis might affect others in the labour market? A rise in people interested in retiring? Retirement on medical grounds? Or will people work longer like in the financial crisis?

Our previous research does show that, while 18-24-year-olds have the highest rates of furloughing and job losses, over-60s been disproportionately impacted, too. There is a risk that older workers losing work will choose to retire and become economically inactive rather than re-entering work, which could hurt their living standards in retirement through lost earnings and pension contributions if they end careers before their time.

On the other hand, you’re right to say that people worked more after the financial crisis, in a large part to make up for falling incomes. It’s too early to tell how people will respond to this crisis – but a comprehensive labour market response in the coming recovery phase will help to ensure that people don’t get shut out of the labour market by long-term inactivity.