The Government are trying to show they are listening, but will the Budget show they are?
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With the next General Election likely only 18 months away, Jeremy Hunt’s Spring Budget statement represents one of the last opportunities for the Conservative Government to deliver on the promises of its 2019 manifesto, and demonstrate to voters that they are a party of Government, capable of taking decisive action on the economic and labour market challenges we face today.
Will labour market participation measures grasp the fundamental challenges facing different worker groups?
A pre Budget announcement indicates the Government will introduce a range of measures to try and tackle persistent labour shortages. These include providing support to meet childcare costs upfront for those on Universal Credit to support them into work, expanding skills bootcamps and scrapping Work Capability Assessments.
The extent to which these measures are enough to make a meaningful impact while protecting vulnerable people will depend on the detail announced on Wednesday.
For example, on childcare alongside important changes to Universal Credit, we need to see significant and long-term investment in the sector to support parents with rising costs, improve job quality and security in the sector and ensure provision is able to meet likely future demand. This is particularly important for women, even those who are in work. Work Foundation research has shown that working mothers with young children are 2.7 times more likely than fathers to experience severely insecure work – in large part due to the constraints they face when it comes to unaffordable or unavailable childcare provision.
Alongside this, recent analysis from the Joseph Rowntree Foundation also finds that many disabled people and individuals with health conditions are facing challenges entering and staying in work, and underscores how important action on supporting those with long-term health conditions who want to work to find the right working arrangements will be.
And yet we are also likely to see the Government position these changes as a ‘carrot and stick’ approach - the ‘stick’ being yet further punitive sanctions for those in receipt of Universal Credit if they are unable to find work. Such measures are highly unlikely to lead to sustained employment for those pushed into taking on any old job, but are almost guaranteed to increase anxiety and precarity for some of the most vulnerable households in the country.
Will Government signal an intent to deliver manifesto promises on secure work?
An additional way to support more people in to the labour market would be to improve the quality of jobs on offer, and the terms and conditions people are offered. Despite various commitments over the course of the Parliament to toughen worker protections and increase workplace flexibility, progress has been partial at best, and latterly has stalled altogether. Promises of an Employment Bill to drive forward this activity have seemingly been abandoned.
And yet Work Foundation analysis makes clear that over six million UK workers find themselves in severely insecure work, facing low pay, uncertain hours and possessing fewer employment rights. Worryingly there are signs that insecure work may be increasing further. For example, the number of zero-hours contracts went up by 89,000 in October-December, rising to a total of 1.13 million. While this remains a small proportion of the working population, it is a figure that has been rising consistently since 2010, and in the context of an uncertain economic picture over the months ahead, there’s a risk that employers use casual and temporary contracts instead of permanent hiring.
Even if a full-blown Employment Bill is now unlikely, the Government could introduce an Employment White Paper consultation, building on its flexible working taskforce and review of economic inactivity, to engage with employers, worker groups and civil society to set out comprehensive proposals for strengthening employment rights and protections.
Does the Spring Budget support the workers and job seekers most in need?
In addition to addressing key labour market challenges, Government must not step back from its support for vulnerable workers and job seekers in the context of the cost of living crisis.
Workers are significantly worse off than they were a year ago with real wages down 2.5% on the year and, despite wholesale energy prices dropping, the Energy Price Guarantee is due to rise by 20% on 1 April to an average of £3,000 per household. Wage growth may be historically strong, but it is still being outpaced by double digit inflation and those in the public sector are being hit hardest.
Universal Credit is due to rise by 10.1% in April, but it remains one of the least generous social security systems across OECD countries. Research by the Joseph Rowntree Foundation shows that 90% of low-income households on Universal Credit are currently going without essentials.
At a minimum, the Chancellor should cancel the Energy Price Guarantee rise, secure significant progress on agreeing public sector pay settlements, while targeting specific additional employer support on those sectors most impacted by rising operational costs.
The Government may want to use the Spring Budget show they have understand the concerns of workers, job seekers and employers, but this week’s announcements will need to translate to economic growth and improved living standards to show they truly understand.
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