This week, the Chancellor of the Exchequer presented a summer statement focussed on “jobs, jobs and jobs”. The statement came just one day after the OECD warned that UK unemployment could soar to almost 15% if the country experiences a second wave of Covid-19 infections.

Youth unemployment

The lockdown measures taken to protect public health have already had a significant impact on employment. We won’t know the full scale of this impact until the furlough scheme ends, but what we do know is that not all people are affected equally. Low-paid workers and young people are particularly impacted, as they are more likely to work in sectors most affected by lockdown measures. A recent study by the London School of Economics points out that young people face the particularly complex impact of both disrupted education and fewer employment opportunities at the very start of their career. The Resolution Foundation has compiled analysis of the impact of the financial crisis on graduate labour markets, showing that unemployment rose significantly in 2008, especially among recent education leavers with lower-level qualifications.


A particular challenge of this crisis is that many businesses are being forced to reduce entry-level recruitment. A survey by the Institute for Student Employers (ISE) suggests that on average firms are cutting entry level recruitment by around a quarter (23%) this year. This is impacting hiring at all levels, but at the moment graduates seem to be less affected than others. Responding businesses plan to recruit 12% fewer graduates than they were going to before the Covid-19 crisis, compared to 32% fewer apprentices and school leavers and 40% fewer interns and placement students.

Some businesses have taken bold steps to protect jobs for young people. Earlier this week, BP emphasised that it “can’t afford” to cut its graduate and internship programmes, stating: “we need young people in our company”. However, some businesses are having to take incredibly difficult decisions in unprecedented times.

What has the Chancellor announced?

The Chancellor announced a number of initiatives to help employment recover, including specific measures to protect jobs as well as boost the hospitality sector, which has been particularly affected by lockdown.

Job retention bonus

The Government’s plan to scale back dependence on the Job retention scheme is beginning by taking a more agile approach and incentivising employers to retain staff by offering bonuses of £1000 for every staff member brought back from furlough until January 2021. There is great concern around loss of jobs permanently during the crisis and this measure seeks to address this issue and reduce unemployment following COVID-19. The Chancellor also emphasised that reliance on the Furlough scheme could potentially impact employees from a skills and personal development perspective after having been off work for an extended period of time.

Kickstart Scheme

The Kickstart Scheme is particularly targeted at young people at risk of long-term unemployment. Businesses that hire 16-24 year olds for a minimum of 25 hours per week, pay national minimum wage and offering training opportunities will have the wages and overheads for these employees paid by the Government for six months. This is a promising step in preventing long-term employment for young people entering the labour market, and the Chancellor’s emphasis on ‘quality jobs’ certainly sparks hope for those pursuing more specialist careers.

Traineeships & Apprenticeships scheme

The Chancellor put further emphasis on the investment into scaling up employment support schemes, namely through apprenticeships and training. Businesses will be given £2,000 for each new apprentice hired under the age of 25, and £1,500 for those hiring apprentices aged 25 and over.

The Government is also aiming to triple participation in traineeships by investing £111 million in high quality training roles for young people in England. The investment will go towards placements for 16-24 year olds and will provide employers providing trainee schemes funding at the rate of £1,000 per trainee.

For the next academic year £101 million will go towards giving all 18-19 year olds in England the opportunity to study Level 2 and 3 courses when they are not in employment, and will also improve provision and expand eligibility for traineeships to ensure that more young people have access to high quality training.

Supporting Job Creation

The importance of sustainability in support for job creation was also highlighted by the Government and the £2 billion green homes grant was announced, which allows homeowners and landowners to apply for vouchers to help towards the cost of increasing energy efficiency. For low income households the vouchers will cover the entire cost of work.

The aim of these measures is to decrease unemployment in this sector and to push forward the agenda of a more sustainable economy. Energy efficiency and sustainable technology is a sector quite dependant on R&D, so with the climate crisis being an important context highlighted by our Government for rebuilding post Covid-19, it would be promising to see increased funding into the research being done into ‘green’ technologies.

 Will the measures help?

The measures announced yesterday are a hugely positive step towards protecting jobs and helping young people get their foot back on the employment ladder. The package of measures, targeted at both job retention and job creation, are very welcome as we all navigate a sudden and drastic shift in the labour market.

The Kickstart Scheme will give young people opportunity and security for at least six months, as well as helping employers to rebuild the talent and capacity needed to thrive. Importantly, the opportunity of a quality job should benefit young people beyond the six months they are now in employment.

A similar scheme, the Future Jobs Fund, was launched in 2009 in the wake of the financial crisis. There have been various reviews into the impact of the Fund, including a major analysis of the cost and benefits of the Fund by the Department for Work and Pensions. Their review found that the impact of the fund was substantial. Two years after starting the programme, participants were 11 percentage points more likely to be in unsubsidised employment, demonstrating that the longer-term benefits of a short-term job. The review also noted significant net benefits to employers and to society.

We will have to wait a little longer for details on how the various schemes announced yesterday will work in practice, however without doubt the measures announced are positive. We should not underestimate the scale of the problem the UK faces. Unemployment is disastrous for individuals, but also for business and the wider economy. Young people, and the unique skills and insights they bring, have a central role to play in our future. They won’t just help us recover from this crisis, but they will also help us to come back stronger.