Losing a job is stressful. For many, it can involve a loss of identity combined with new social and financial worries. These pressures, particularly when the job loss was unexpected, can challenge even the most resilient among us. In normal times, a job loss is testing. In current times, it can be life changing.
The British Government has long recognised this difficulty. Since the National Insurance Act 1911, the state has stepped in to provide jobseekers with modest support during their time of need.
In the UK today, the main form of unemployment support is New Style Jobseeker’s Allowance, which is paid at £74.35 per week if you are over the age of 25.[1] A jobseeker may also, depending on their circumstances, apply for Universal Credit, with its Standard Allowance of £409.89 per month for a single individual over 25.[2]
When compared with average living costs in the UK, however, this support is frugal. The average UK household has weekly living expenses of £585.60 (of which £203.40 is spent on housing, food and communication).[3] An average claimant of New Style JSA is, therefore, unable to cover living expenses while job seeking.
Alongside this, Coronavirus and Brexit are likely to change the UK economy in future years, in many far reaching and currently unknown ways. Whatever form these changes take, it is likely they will necessitate re-skilling of workers, as incumbent industries and businesses are replaced by new entrants and competitors better adapted to the work environment we will see emerge.
Enhancing Jobseeker Support
The British are enterprising and hardworking. Finding themselves without a job, but capable of working, we seek new work. We should therefore, as far as possible, support jobseekers through their difficult time, while still incentivising them to find new work.
To do this, the Conservative Government should bolster support for jobseekers in the UK in three ways.
First, the Government should increase the period during which jobseekers can receive support through New Style Jobseekers Allowance. At present, claimants can receive support for up to 6 months of unemployment. This should be become a 6-to-12-month window, with length over 6 months assessed based on historic national insurance payments.
Doing so would give those who have been employed for a ‘long’ period (such period as determined by Government) the opportunity to receive a commensurately longer period of support, during which time the jobseeker can seek new work or re-skill. An extension from 6 to 12 months may, for example, be dependent specifically on re-skill training.
A longer period of support, such as this, is not uncommon. For example, New Zealand offers 12+ months of support[4], Switzerland 6-12 months[5], Germany 12 months[6] and Spain almost 2 years.[7]
Secondly, the UK should modestly increase its rate of New Style Jobseekers Allowance. Many countries are currently more generous than the UK in this regard: New Zealand offers £130 per week (NZ$250.74)[8], Australia £156 a week (A$565.70 per fortnight)[9], and Spain a minimum of £103 per week (€501.98 a month).[10] In the USA, known for frugal jobseeker support, the State of Mississippi offers the lowest support, at £178 per week (US$235).[11]
Modestly increasing New Style Jobseekers Allowance will both simplify the welfare claim process for those seeking work (avoiding the need for interaction with the Universal Credit system), and ensure jobseekers receive adequate financial support through their time of need.
Designed properly, increased New Style JSA could also keep jobseekers incentivised to find new roles better than the current system. To do this, a more generous New Style JSA could offset against Universal Credit. Doing this would, through the time-limited nature of New Style JSA, ‘nudge’ jobseekers into finding a role as quickly as possible, in a way that time-uncapped Universal Credit does not. It would do this not by decreasing overall financial support for a jobseeker, but simply by changing the nature of welfare support they receive. Ultimately, as far as possible, short and mid-term jobseekers should not be incentivised to enter the long-term welfare system for support.
Thirdly, the Government should widen its rollout of high-quality reskilling opportunities for those who have lost their jobs in industries that may be adversely affected by Coronavirus or Brexit. This involves not just Job Centre re-skilling programmes, but ambitious partnering with best-in-class businesses and reskilling institutions. One example is Flatiron School (for coding), which specialises in re-skilling into technology. Adopting partnerships with high quality reskilling institutions will bring brand to the process, which in turn will help ensure jobseekers are re-skilled in a manner attractive to employers.
By augmenting the UK’s jobseeker support net in these three simple ways, we will give our workforce a compounding global skill advantage for years to come, while ensuring our economy is able to capitalise on our country’s dynamism, whatever future challenges we may face.
[1] Turn2Us Jobseeker’s Allowance Guide here
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