This is not the economy you were expecting when you won the election in December. Then, unemployment was less than 4%, a multi-decade low. By the end of this year, it could be three times that level, or perhaps worse: some pessimists are forecasting five million unemployed — the most rapid rise in history.
The social and economic implications of such a sudden increase in idleness are very worrying. There’s likely to be a sharp increase in mental health and addiction issues, domestic abuse, family break-ups, suicide and homelessness — and, conceivably, civil unrest. Look at the mayhem in America.
While the furlough scheme may have staved off redundancies, the lockdown has done its damage: if businesses are put into induced comas, quite a number will die — and the jobs associated with them will disappear. Moreover, the damage inflicted on Britain’s finances by five million jobless would be severe.
What can be done to help the army of the newly unemployed? Jobs are being shed by various sectors: aerospace, tourism, construction, catering, retail, charities, oil and gas, automotive and media, among others. Many firms have failed or will go bust. Others are cutting costs to survive. Much of this restructuring is just an acceleration of existing trends — weak organisations forced to the wall, and vulnerable sectors such as retailing speeding up a process of downsizing. Some businesses are expanding but they will absorb only a small proportion of the surplus labour.
Unfortunately, permanent jobs that add value cannot be manufactured to order by central command. Most arise in an unplanned way from the initiatives of entrepreneurs, who need staff to grow their creations. They endure only where providers satisfy real customer demand while generating a surplus.
Many of the newly unemployed should retrain to acquire skills that the market needs. Businesses want more technicians, engineers, software programmers, healthcare workers and craft skills. The apprenticeship scheme is a shambles and needs rapid reform so it is easier for companies and applicants to access. The university sector is facing its own challenges: the government should help it, but also form an office to restructure weaker institutions, possibly merging some with further education colleges — all providing practical skills that enable graduates to obtain jobs for which they are qualified straight away. Students must gain career skills rather than academic qualifications that are irrelevant in the 21st-century job market.
Those out of work who receive benefits should be required to study to broaden their skills base, so they keep busy and become more employable. The lockdown has led to an explosion in online learning. This must be adopted by the jobless. We cannot rely on slow-moving educational institutions. Britain is a leader in digital learning, and the government must work with private providers to deliver relevant courses.
Automation, e-commerce and outsourcing are the underlying, longer-term threats to many job categories. A lot of jobs aren’t coming back, even once the economy recovers. To combat these shifts we need better research into what organisations want from their workforces, so educators can supply the appropriate knowledge to trainees.
To direct these actions, I suggest you, Boris, appoint a jobs brains trust to come up with tailored solutions and help to execute the plan. It should be entirely composed of industry leaders who understand human capital and know what employers need from people. They could also help to improve the apprenticeship mess. The members need to be corporate managers and entrepreneurs with the energy and time to contribute to the great fightback.
There are many other initiatives that will help boost growth, thereby generating jobs. Among the areas that government needs to focus on are trade liberalisation, to remove barriers and tariffs to international trade in the wake of Brexit; planning law reform, to make it much easier to build and repurpose property; employment law reform, to encourage entrepreneurs to take the risk of recruiting staff; and investment incentives to motivate backers to choose Britain as the place for their capital, especially with regards to new ventures and innovation.
Be bold, Boris. Take some calculated risks and trust to markets where possible.