This report explores the potential increase in long term unemployment as a result of the coronavirus crisis.
People become long-term unemployed when they have been out of work for 12 months. Long-term unemployment can scar individuals, families, and communities for years to come. It can reduce peoples’ chance of finding work in the future, and lead to health and mental health problems.
We find that long-term unemployment could hit 1.6 million in 2021-22 – a 600% increase since the start of the crisis, and the highest level since 1994.
If there is a slower recovery than anticipated by OBR, then we estimate that long-term unemployment could remain over 1 million for up to four years. 290,000 young people could become long-term unemployed.
The scale of the challenge is huge. The number of people becoming long-term unemployed in April and May 2021 could be up to three times higher than peak monthly referrals to the Work Programme introduced after the last recession. Planning to deliver support to the long-term unemployed at the right time and to the right scale is now critical. We estimate that up to £4 billion will be needed next year to provide the services to get people back into work.
We think there should be a universal offer to all long-term unemployed people across the UK, but with devolved administrations and local government delivering the support at a local level. We need to galvanise national and local partners to work together to gear up for a launch of new and extended support in Spring 2021.