A Perilous Shift in the UK's Job Support Plans

Strategic Insights -

The UK's economic plan has been touted as one that allows the labor market to adjust to the permanent transformations brought about by the coronavirus pandemic. However, critics argue that this approach is premature and potentially disastrous. The government's move to cut job support and extend the furlough scheme only to "viable" jobs is based on the idea that economies will be reshaped forever, with some jobs rendered obsolete by the rise of online shopping and remote working. However, it's impossible to determine which jobs will be viable after the crisis ends while we are still in the middle of it, and the government's decision may exacerbate the problem by letting unemployment surge.

Key Takeaways:

  • The UK's economic plan is based on the idea that the labor market must adjust to the permanent transformations brought about by the pandemic, but critics argue that this approach is premature and potentially disastrous.
  • The government's move to cut job support and extend the furlough scheme only to "viable" jobs is based on the assumption that some jobs will be rendered obsolete by the rise of online shopping and remote working, but it's impossible to determine which jobs will be viable after the crisis ends.
  • The UK has roughly half as many job vacancies as it did in February, and the sectors that usually absorb the jobless are hamstrung by Covid-19 restrictions.
  • The government's promise of retraining is useful, but does not address the shortage of new jobs.
  • Economists predict that UK unemployment will rise by 1m by the end of the year, potentially triggering a downward economic spiral.
  • The government should create jobs that equip the economy for the future, such as care workers, teachers, nurses, and green boiler installers.
  • Creating 180,000 care workers to bring the ratio of carers to the over-70s population back to its 2014 peak would cost about £5bn, according to the Resolution Foundation think-tank.

Statistics:

  • The UK has roughly half as many job vacancies as it did in February (Source: [1])
  • The sectors that usually absorb the jobless are hamstrung by Covid-19 restrictions (Source: [1])
  • Economists predict that UK unemployment will rise by 1m by the end of the year (Source: [1])
  • The number of care workers needed to bring the ratio of carers to the over-70s population back to its 2014 peak: 180,000 (Source: [2])
  • The cost of creating these care workers: £5bn (Source: [2])

Sources:

[1] The Financial Times, [UK government's economic plan based on flawed assumption, critics say](https://www.ft.com/content/36216a10-1f45-43c7-9bf4-69a2c19d3f92)

[2] Resolution Foundation, [Investing in care: the economic case for the UK](https://www.resolutionfoundation.org/publications/investing-in-care-the-economic-case-for-the-uk/)