As the UK unemployment rate reaches a two-year high, Labour leader Sir Keir Starmer is to call for ‘firing and rehiring’ methods to be outlawed and for a successor to the furlough scheme.
Speaking to the TUC’s annual conference today, Starmer will propose a new scheme that includes opportunities for part-time working and rewarding employers who provide staff with opportunities to work, rather than cut jobs.
This will help to avoid the “scarring effect” of mass unemployment that is expected beyond 31 October, when the Coronavirus Job Retention Scheme is due to end, Starmer will say.
He will urge the government to outlaw practices whereby employers dismiss employees but then re-hire them on lesser pay and conditions.
“These tactics punish good employers, hit working people hard and harm our economy,” he will say.
“Imagine how powerful it would be if we could form a genuine national plan to protect jobs, create new ones and investing in skills and training.
“I’m making an open offer to the prime minister: Work with us to keep millions of people in work, work with the trade unions and work with businesses, do everything possible to protect jobs and to deliver for working people.”
He will also urge employers and the government to provide training and support for those who cannot return to work full time, and suggest schemes that will target sectors most in need of help, such as retail and aviation.
His call comes as new figures from the Office for National Statistics show some 695,000 workers have been removed from company payrolls since March.
The unemployment rate grew to 4.1% in the three months to July, from 3.9% in the previous quarter.
Despite unemployment reaching a two-year high, Jack Kennedy, UK economist at jobsite Indeed, said the figures painted a “deceptively rosy picture”.
“For months the official unemployment rate has resembled an iceberg – deceptively small and with the true toll of the pandemic largely hidden beneath the surface,” he said. “But as the months go by we’re starting to see official signs of the danger ahead.”
“As the end of the furlough scheme approaches, the sheer scale of the UK’s job losses is looming larger and the labour market is recoiling in response. The blunt truth is hundreds of thousands of people who had a job before Covid-19 hit no longer do.”
However, James Reed, chairman of the recruitment firm Reed, said it was not the time to “panic” and extend the furlough scheme, as many have called for.
“It’s time for the country to move on. Businesses need to level with their furloughed staff about their future as soon as they are able to,” said Reed.
“People are facing uncertainty over whether their jobs will exist once the furlough scheme winds down, and are in need of assurances either way. They must be allo wed to move on, learn new skills, and begin searching for a new employer.”
He said more than 128,000 new jobs were added to its site in August – a 7.5% month-on-month increase.
The ONS figures show that young people have been particularly affected by job losses. Those aged 16 to 24 suffered the biggest drop in employment compared with other age groups –there were 156,000 fewer young people in employment in the three months to July.
CIPD’s senior labour market analyst Gerwyn Davies said further support was needed to prevent more job losses among younger workers.
“Given we know that overall employment prospects are likely to deteriorate considerably over the next few months as a result of the closure furlough scheme and economic conditions, the government will need to consider additional support beyond Kick Start to boost the job prospects of 16-24 year-olds. For example, there is a need to boost investment in life-long learning and provide further bespoke support for the unemployed including employability skills development and jobs brokerage support,” he said.
More resource needed to be invested in the charity sector, which is expected to see a surge in demand for its services has unemployment grows, suggested Matt Whittaker, CEO of Pro Bono Economics.
“As the coronavirus health crisis increasingly gives way to an economic and social crisis, we can expect rising numbers of people to turn to charitable organisations for help. Charities will once again step up to do what they can to support those in need. But these organisations are themselves under huge pressure, and our research estimates that 60,000 of the jobs lost this year will come from the charity sector,” he said.
“It’s vital that more resources are funnelled into the social sector and that years of public policy neglect are reversed, so that charities can fulfil their central role in the country’s recovery from Covid-19.”