The Kickstart Jobs Scheme explained
As lockdown measures ease, the UK moves into the second phase of recovery from coronavirus; this phase focuses on the state of the post-pandemic economy. Despite the government’s job retention (“furlough”) scheme, which has been paying 80% of the wages for one in four people in the UK since May, the number of people claiming unemployment benefits has soared from 22 thousand to 2.6 million this June. Young people in particular have soaked up the shockwaves of this new unemployment crisis, as 10% of 18 to 24-year olds have reported joblessness, and the number of people under 24 claiming universal credit has almost doubled since lockdown began. This is perhaps not surprising given that young people predominantly occupy the job sectors (namely leisure, travel, hospitality, and retail) which have been hit the hardest by lockdown. Furthermore, as hundreds of thousands of university graduates begin the job hunt this summer, they will be in gross competition with each other for a minute number of spaces, leading many to believe that the post-coronavirus job market will be the toughest job market in decades. All this is to say, there is a very real fear that an entire demographic of the population could be “left behind” in long-term unemployment in the weeks, months and even years following this pandemic.
What is the Kickstart Jobs scheme?
In addressing the looming mass unemployment crisis, Chancellor Rishi Sunak has proposed an inspiring job creation initiative, the “Kickstart Jobs” scheme. The scheme endeavours to protect and support young adults in the challenging post-lockdown job market, by helping them get (back) to work and thus dampening the shockwaves of the pandemic felt by future generations.
How does the scheme work?
The main premise of the scheme is that the government will essentially reward businesses that employ young adults, by paying 100 per cent of their salaries (at the national minimum wage) for 25 hours of work per week over a six month-long work placement. Participants can expect to receive £455 per month if they are under 18 years of age, £645 per month if 18 to 20, and £820 per month if 21 to 24. In return, employers will essentially receive government-paid employees for six months. The hope is that, by alleviating the costs of employing and training young (and typically less experienced) adults, businesses will be incentivised to take on young adults in this fragile economic climate. The scheme will be enforced by Jobcentre Plus, who will act as a sort of matchmaker, allocating successful applicants for appropriate placements. If the scheme is successful, an estimated 350,000 job placements will be made.
Ideally, businesses will continue to employ their young adults following the designated six-months, provided that the economy is in a more stable position at that time. However, even if they do not, the idea is that the young workers will come out with high-quality training and relevant experience to facilitate career progression and stable long-term employment. And, of course, the more people that are employed, the stronger the economy. In this regard, the Kickstarter scheme, which is thought to come at a cost of 2 billion pounds, can be seen as an investment in the economy.
Can I apply for the scheme?
The government is encouraging all businesses, of all scales, to get involved.
With regards to applicants, the Kickstarter scheme aims to prioritise the needs of young jobseekers in the current economic climate. Specifically, those aged 16 to 24 and in receipt of universal credit will be able to apply.
How applicants will be selected is still not completely clear, but it will likely be influenced by the applicant’s personal circumstances and their relative risk of long-term unemployment. Consequently, while both university graduates and non-graduates within the 16-24 age bracket are eligible, it is likely the latter group will be prioritised. This might even have an indirectly positive effect on the job prospects of university graduates, however, by lightening the competition for other jobs.
Where and when will the scheme operate?
Businesses and young people in England, Scotland, and Wales can sign up to be part of this scheme as soon as August 2020, with placements planned to start in September 2020. Northern Ireland can expect to benefit from a similar but separate scheme, and the details of this are yet be confirmed. The scheme is expected to end by December 2021, however this is subject to revaluation and extension, depending on the rate of recovery of the UK economy post coronavirus.
Will it be a success or failure?
Even in its early stages, many have already identified potential flaws in the Kickstarter scheme. Some argue that it is easily exploitable, as companies may take advantage of the “free” labour and fail to give participants the high-quality training they need for successful career progression. Other companies may continuously exchange participants every six months, with no intention of offering more long-term positions. Others argue that the scheme may encourage companies to replace existing, older workers with new, younger workers. This scheme will therefore benefit from the establishment of clear standards and guidelines for employers and participants.
We may gain insight into the success of the Kickstarter scheme through historical reflection. A similar back-to-work type scheme, called the “Future Jobs Fund (FJF)” was introduced by the former prime minister Gordon Brown following the economic collapse of 2008. The cost of the scheme was roughly 330 million pounds to the Exchequer; in comparison, the Kickstarter scheme has a budget of 2 billion pounds. In 2012, the Department for Work Pensions reported that the net monetary benefit of the FJF initiative was £4,000 per employee and £6,850 per employer. Given that the premise of Sunak’s Kickstarter scheme is similar to Brown’s FJF scheme we might expect a similar triumph. If not, we might expect a greater triumph, since the FJF scheme had a budget less than a quarter of the Kickstarter scheme. Still, some political leaders have concerns that the “scale of support is just not good enough” to address the potential mass unemployment.
At the very least, the Kickstarter scheme is reassuring to the public that the UK government is learning from the lessons of the past to help improve the future, even if this approach has been met with some criticism.