Urgent action needed to plug one million jobs gap

The economy may create one million fewer jobs than needed to quickly recover from the coronavirus crisis, according to a leading think tank.


10 09 2020


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The report by Learning and Work Institute shows that employment has taken up to seven years to recover after previous recessions. Employment recovery may be slower this time with big employers like hospitality and retail facing ongoing social distancing and consumer confidence limits: in France and Germany footfall is still around 15% below pre-crisis levels.

While many jobs have returned, the situation may be worsened by the planned end of the Coronavirus Job Retention Scheme in October, which is still supporting up to 6.8 million jobs. The Office for Budget Responsibility’s projections assume that more than one million furloughed workers may not have jobs to return to, risking a second spike of unemployment.

Employment will grow as the economy reopens and adjusts, but on past experience not quickly enough. With sectors like retail and hospitality remaining constrained, the number of workers switching careers would need to be far higher than seen before to avoid further growth in unemployment.

Missing millions: Where will the jobs come from?


The report calls for a three part plan to fill the jobs gap:

  1. Invest to create jobs. Including 50,000 more jobs from accelerating public investment and 270,000 from a much-needed £7.6 billion boost to social care, childcare and adult learning;
  2. Stimulate job creation. Including up to 320,000 green jobs by investing £3 billion in home energy efficiency, and providing £1 billion to expand Kickstart placements to adults; and
  3. Protect existing jobs. Through a £4 billion wage support scheme, paying 20% of the wages of up to 500,000 workers in the hardest-hit sectors like retail and hospitality when the furlough scheme ends. 

The report also provides a detailed picture of how the jobs gap may vary across the country. It shows that areas with high unemployment before the crisis, like Blackpool, have been hardest hit. Areas like Swindon and Barking have seen lower rises in unemployment, but have higher proportions of workers furloughed meaning they risk larger rises in job loss in the autumn.

This puts the Government’s aim of ‘levelling up’ at risk. The report argues local government should play a leading role in promoting economic growth and matching those losing their jobs to new opportunities created. For example, many city centres may need to change their focus as footfall from commuters fails to fully return. Meanwhile, areas reliant on international trade may face further employment challenges in 2021, depending on the success of trade negotiations with the EU.

Stephen Evans, chief executive of Learning and Work Institute
We face a jobs gap of one million and large increase in unemployment without urgent action to increase job creation. The economy is reopening, but sectors like hospitality and retail remain below their pre-crisis capacity and the furlough scheme will soon come to an end. We cannot protect every job, but nor will the economy naturally create enough jobs quickly enough for those losing their work to move into. To close the jobs gap, we need public investment to create jobs, measures to encourage employers to create jobs, and a new wage support scheme to protect jobs in sectors hardest hit by the crisis.