Comment

What we need next is job creation, training and hiring

Here's how the Government can help people transition back into work and avoid a long-term unemployment crisis

Positive economic commentary is hard to come by right now. That’s understandable. Earlier this month, the ONS confirmed GDP fell by a record 20.4pc in the second quarter of the year – while there were an extra 730,000 people out of work compared with March.

And it’s fair to say things will get worse before they get better. The furlough scheme comes to an end in October and only then will the extent of the unemployment problem be revealed. It’s bad, but it’s important to remember that we are not just passengers in all this. We can act to minimise the unemployment increase that is coming.

There are glimmers of hope. This is a consumer business recession unlike anything we’ve seen before. As lockdown has eased and consumer demand picks back up, we are seeing a steady beat of new vacancies starting to fill up jobs boards again.

Our Jobs Recovery Tracker is tracing a month-on-month increase in new job advertisements – a sign that business is picking up and reassuring news for people who have lost jobs. Employer confidence, a vital ingredient for economic growth, is also on the up and many firms are telling us they intend to take on more staff soon. Making sure we take steps to nurture these budding but fragile shoots of recovery will help avoid a long-term crisis.

At the top of the Government’s priority list needs to be a plan for encouraging job retention and boosting hiring. The support we’ve had so far, like the furlough scheme, has been vital. But now we need to focus not just on keeping people in jobs, but helping the unemployed transition into new roles – ones that will be sustainable without government subsidy.

Lowering employers’ National Insurance would reduce staff costs without hitting employees’ earnings. It’s the biggest business tax and reflects a concerning trend over the last decade – taxing companies more for doing business, rather than taxing profits once they are made.

Lower NI would encourage firms to keep more people on their payroll while lowering the barriers to hiring new staff. If more tax revenue is needed, it would be more economically beneficial to raise it elsewhere, rather than by taxing jobs.

This is going to be a staggered recovery. Different industries are recovering at varying speeds. Jobs in construction, logistics and childminding were leading the way in early August, while office-based roles are returning more slowly.

But not every industry will bounce back completely – our economy will change shape in a recession, as it always does. The important question is how to help people who have lost their jobs transition into growth industries, and young people make their way into work in growing areas.

Some newly unemployed people may not have had to seek work for many years. They will need help identifying their transferable skills and looking for vacancies in a digitised environment, as well as the practical tasks of putting together a CV, writing applications and preparing for interviews.

The Chancellor’s announcement of funding for a job search support scheme is welcome. The important thing is to move fast and to use the unparalleled expertise of the UK’s recruitment businesses to help.

Recruiters are jobs experts who are already supporting people with core employability skills on a daily basis. We will see massive demand for these services in the coming months, and a real partnership with the recruitment industry would mean this support could be expanded quickly to meet it.

Using the nation’s network of local and sector jobs specialists to deliver this scheme makes sense – better harnessing the genius of all our businesses than doing it from one big call centre.

But it is about more than matching and interview support. Growing areas need different skills.

The Government’s record in supporting skills development is patchy, at best. Too much of the provision has been designed in Whitehall, not the workplace. As an example, the failing Apprenticeship Levy has caused a fall in new starts, not a rise. But business discontent on this isn’t about paying the levy – it’s about making sure they are buying what workers and companies need.

A swift move is necessary to ensure state training funds – and business levy funds too, if the Department of Education is imaginative – can be used on high quality training, however long the course is.

Apprenticeships are great, but they aren’t the only show in town. Why should a firm leave levy money unspent when they could give a young person a chance in a role without a recognised apprenticeship, and use that money to fund the important initial training that young person needs to start work?

An unprecedented crisis calls for an unprecedented response. The initial government supports put into place were the big solutions we needed. The success of the Job Retention Scheme, for example, can be measured in the number of people still on the payroll despite a drop of more than 191 million working hours. What we need now is to build on that success with the same boldness and sense of urgency and make it stick. We’ll need different policies for the recovery, but business is ready to play its part.

 

Neil Carberry is chief executive of the Recruitment and Employment Confederation