The chancellor is due to announce a £2bn “kickstart jobs scheme” today in the hope it will stem youth unemployment in the wake of the coronavirus pandemic.
The government fund will subsidise six-month work placements for people on Universal Credit between the ages of 16 and 24 who are at risk from long-term unemployment. The scheme will help an estimated 350,000 people.
The jobs scheme is one of a number of announcements to be made at today’s Prime Minister’s Questions as part of a ‘summer statement’ of budget commitments.
Coronavirus & the labour market
It forms part of the government’s “three-point plan” for jobs that began with the Coronavirus Job Retention Scheme, continues with today’s support for youth employment and the Prime Minister’s ‘New Deal’ infrastructure announcements last week, and will follow in the autumn in the next spending review.
Employers can start making applications for job subsidies from August, according to the Treasury, with the first cohort starting placements in the autumn.
The announcement comes after a number of reports have suggested that young people are likely to bear the brunt of Covid-19’s economic impact – a recent report by the Resolution Foundation suggested the pandemic could push youth unemployment to over 1 million.
Young workers also heavily populate sectors such as hospitality, retail and leisure, which have been badly hit by the lockdown. In the first two months of the coronavirus lockdown, the number of 18 to 24-year-olds claiming Universal Credit rose by 250,000 to almost half a million.
Sunak said: “Young people bear the brunt of most economic crises, but they are at particular risk this time because they work in the sectors disproportionately hit by the pandemic.
“We also know that youth unemployment has a long-term impact on jobs and wages and we don’t want to see that happen to this generation. So we’ve got a bold plan to protect, support and create jobs – a Plan for Jobs.”
The government will cover 100% of the national minimum wage for 25 hours a week of any ‘kickstarter’ job, and employers will be able to provide wage top-ups. The national minimum wage for those under 21 is £6.45 an hour (18 to 20-year-olds) or £8.20 (21 to 24-year-olds).
TUC general secretary Frances O’Grady said her union would be “checking the small print” of the scheme.
“The chancellor has made a good first step. But we’ll be checking the small print to ensure every job provides proper training and a bridge to steady employment,” she said.
“Employers must do the right thing. They should work with unions to avoid job displacement, create good opportunities for all young workers and guarantee they are paid at least the real living wage.
“We must do all we can to avoid the misery of mass unemployment. The government should bring business and unions together in a national recovery council so working people are not made to pay the price of this crisis and ensure we build back better, right across the country.”
Josh Graff, head of LinkedIn in the UK, added: “The chancellor’s commitments today will come as very welcome news for job seekers, and younger people in particular.
“While the UK labour market is starting to show signs of improvement, our data shows there are three times as many people applying to every role compared to this time last year, and people in the hardest hit industries are already turning to other sectors to find jobs.”
Today the chancellor is also expected to confirm funding to triple the scale of traineeships in 2020/21, a £32m boost in funding for the National Careers Service and £17m in funding to triple the number of sector-based work academy placements in the next academic year.