In March 2020, Rishi Sunak first announced the introduction of furlough, a word that has become incredibly familiar with workers up and down the UK. 18 months later, the biggest state intervention in the UK’s labour market has come to an end, costing £70bn.
There is no doubt that the furlough scheme has helped save millions of jobs across the country. In fact, at its peak in May 2020, almost nine million jobs were being supported by the initiative, which covered 80% of wages up to a monthly limit of £2,500. However, this short term save has masked the true scale of the UK’s unemployment problem.
So, what can we expect to see now that furlough has ended?
Still in Recovery
Given the past 18 months, many companies simply aren’t ready to bring all their staff back, no matter how much they want to. If a business has not been able to recover sufficiently from the economic impact of the pandemic, or is not able to operate at full capacity yet, bringing back their employees is not going to be high on their agenda. This means many who have been able to hold onto their jobs over the pandemic period, will now be at significant risk of unemployment.
The Bank of England has stated its concern about what is going to happen to more than one million ‘still-furloughed’ workers once employers are responsible for paying their wages in full.
For many, it has been a case of pivoting the business to survive. This change has meant that employers now don’t require the same resources. The modern way of working has changed forever, with technologies playing a more important role than ever before. For many employers, this means retraining existing staff, hiring new people that offer different skills sets, or simply employing fewer individuals.
Something that continues to go unnoticed is that certain demographics of the workforce have been impacted more significantly than others. As is always the case during times of economic uncertainty, young people are among the hardest to be hit.
Over the past year, one third of 18 to 24-year-olds have lost their job or been furloughed. Further to this, young people are 125% more likely than the rest of society to have become unemployed since March 2020. These are certainly alarming numbers.
While the UK’s unemployment rate is tracking at 4.6%, youth unemployment is three times higher than this. This is partly because millions of young people work in the sectors that suffered most from the lockdown restrictions, such as hospitality. Unfortunately, as the furlough scheme comes to an end, the relationship between COVID and unemployment amongst emerging talent will heighten.
Whilst many experts are making predictions about the true impact COVID-19 has had on the UK’s unemployment levels, we are yet to fully understand or appreciate the true ramifications. For me, I think that the unemployment levels will worsen initially following the end of furlough, however, the long-term outlook will be more positive. The economy is recovering faster than expected, with experts suggesting that employment rates will recover after the post-furlough dip.
With youth unemployment reaching almost 15%, recovery amongst this group will take a little bit longer. However, there are a number of innovative, Government-led response schemes in place, including the Kickstart Scheme. These programmes have been designed to support young people specifically after the issue of ‘mainstream unemployment’ ends.
Action needs to be taken, and it needs to be taken now. Employers must be proactive in offering young people the support they need now more than ever to navigate their next career steps. At MyKindaFuture, we responded by joining forces with the Department of Work and Pensions to launch our Get into Work initiative. This programme has been designed to support young job seekers across the UK into employment. Using Connectr, our online mentoring platform, the ‘Get into Work’ scheme provides young jobseekers with vital the advice, tools and confidence they need to secure a job and succeed in it. Due to its initial successes, the initiative has been expanded in partnership with Sage, to support diverse individuals of all ages looking to start their own business in taking their next steps.
By supporting the hardest hit and most disadvantaged groups, employers can respond to this crisis and help diverse talent come out the other side of the pandemic with a job and progression prospects.
Furlough ending is going to have an impact on thousands of people across the country, especially those from underrepresented groups. By being pre-emptive and proactive about the situation, employers can provide the necessary support, which will create a truly diverse, motivated, and successful workforce.
Find out how MyKindaFuture can help your business take action and support our future workforce into employment here.