The Government should guarantee a job to anyone left unemployed by the coronavirus crisis and use the labour force created to support the decarbonisation of the UK economy, a think-tank has suggested.
The Social Market Foundation said that the next phase of the Covid-19 crisis could leave hundreds of thousands of people facing structural unemployment as whole sectors of the economy shrink sharply.
To protect those people from the “scarring effects” of unemployment, the SMF said ministers should draw up a new work-and-training guarantee programme to ensure anyone who cannot find a conventional job is paid by the state.
Placements should last six months with participants paid the national living wage of up to £8.72 an hour to work for either private- or public-sector employees.
State-funded workers should be steered toward roles making the changes that will be needed to deliver a net-zero economy, including insulating homes, replacing gas boilers and installing electric-vehicle charging points.
Directing state-funded workers towards green jobs could also support the levelling up agenda, the SMF said, noting that Committee on Climate Change analysis shows that low-carbon projects are “labour-intensive” and “spread geographically across the UK” and could produce high economic returns.
The SMF estimated that in some parts of the country, the number of green jobs that need to be filled to meet the Net Zero goal is equal to half the population of pre-crisis unemployed people. (See Figure 1 below.)
Universities left with spare capacity by falling student numbers should be enlisted to help provide online training and education as part of the job guarantee scheme, said the cross-party think-tank.
In a briefing paper published today the SMF, said that guaranteeing work for people left unemployed was the next logical step after the Government’s temporary furlough scheme, which is paying wages for millions of inactive workers.
The Office for Budget Responsibility has projected that up to 1.4 million people face unemployment in the wake of the lockdown and the huge economic downturn it has caused.
Many of those at risk of unemployment after the lockdown are in sectors that require few formal qualifications and offer little in-work training. A guaranteed work scheme should address skills shortages by paying participants to train for at least 8 hours a week, the SMF suggested.
“The coronavirus shock to the UK economy poses the risk of structural unemployment for hundreds of thousands of people as whole sectors of economic activity shrink dramatically. Many of those affected will lack higher skills,” the SMF paper said.
The SMF said that a universal job guarantee could be very costly, calculating that paying full-time wages to 1.4 million unemployed workers in the UK for six months would cost the Treasury £13.1 billion.
However, that could be a price worth paying, the report said: “The threat of lasting economic, social and mental scarring experienced by those workers justifies innovative new policies.”
The report said that a jobs guarantee scheme should be devised in line with the following principles:
- Training must be a central element. Participants should be given 20% of their working week for training and education. Workplace training should be the priority, but spare capacity in universities could also be used to offer distance learning to some participants.
- Private sector placements should be the priority. Employers benefiting from what amounts to free state-funded labour should be obliged to provide or source training for participants.
- Fill the low-carbon skills gap. Placements under the scheme should prioritise the skills and labour needed to deliver the changes needed to meet the UK’s net-zero goals, especially the decarbonization of home heating and the installation of charging points for electric vehicles.
The Committee on Climate Change last year identified a “low-carbon skills gap” where the UK lacks the workforce to undertake key elements of decarbonising the economy, such as the cutting the emissions of more than 20 million homes. Similar labour capacity issues can be expected in the deployment of millions of charging points for electric vehicles.
“A job guarantee programme that provides hundreds of thousands of jobs and training roles should be used to close that skills gap and use participants’ work and skills to help deliver on the Net Zero agenda,” the SMF said.
Kathryn Petrie, SMF Chief Economist said:
“There is a pressing need to provide better support for those who lose work in this crisis, but also an opportunity. A well-designed guarantee of work and training could protect people from lasting damage, support UK skills and support the greening of the economy.”
Figure 1: Jobs needed to reach Net Zero by 2050 as a proportion of regional unemployment in the 12 months to December 2019
Source: SMF analysis of National Grid and NOMIS data (regional unemployment in 12 months to Dec 2019)
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