When the Chancellor announced his Plan for Jobs earlier this month, he was applauded for his bold measures to avert mass unemployment, particularly among the young.
Launching the package of multiple initiatives, Mr Sumak acknowledged that simply extending the furlough scheme would give some people “false hope” that they could return to their previous roles. Instead, the Plan will introduce new incentives from the autumn so that companies keep investing in their workforces during the economic turmoil. The message to business is, he said “if you stand by your workers, we will stand by you.”
The Kickstart Scheme is the centrepiece. Businesses are encouraged to hire as many 16-24-year-olds currently on universal credit as they can. The government will cover the cost of 25 hours/week for six months at the national minimum wage, worth up to £6,500 per individual.
The Chancellor insisted that Kickstart placements would be “good quality jobs”. However, some commentators have expressed doubts. The Institute for Fiscal Studies questioned whether “low-paid, part-time, temporary work” would genuinely kickstart careers, “or will employers rotate unemployed workers in temporary placements?”
Another concern is that Kickstart could crowd out apprenticeships, despite bonus payments in the Plan for the latter. Both schemes subsidise jobs for young people, but the longer commitment and 20% off-the-job training element don’t always suit employers. Apprenticeship starts from Jan-May are already down on the same period in 2019, according to the Department for Education.
Reshaping workforce skills
Employers say their recruiting decisions will reflect prospects for recovery and genuine need for staff, rather than the generosity of government incentives. The Plan for Jobs will be welcome where it lowers the risk of hiring, rather than propping up jobs in areas of falling demand.
Business leaders should also consider the longer-term opportunity to reshape workforce skills across the board. Having the right skills is a proven multiplier of growth. As organisations refocus, or even pivot, to remain competitive, support such as Kickstart can help them develop the talent they need.
For example, employees have shown their willingness to innovate and adapt to the new conditions by working from home during the crisis. However, IT support needs to ramp up to ensure employees can use remote systems securely. A young person with good people skills and an interest in technology could be trained up quickly to supplement the IT team on the helpdesk.
As longer-term market changes start to become clearer, Boards will be working with HR to work out the ideal workforce profile going forward. Skills development will be central to these discussions and the Chancellor’s announcement is well-timed.