As lockdown eases and businesses begin to reopen their doors to the public, the economy and labour market are flailing. Our Policy Lead Will Thomson explains how the Government should look to the social economy to build resilience across employment sectors and places.
Yesterday, Chancellor Rishi Sunak gave a statement in Parliament outlining his £30 billion, three-point ‘Plan for Jobs’ which involved: (1) supporting jobs, (2) creating jobs and (3) protecting jobs.
The Chancellor’s plan was very much aimed at getting the economy and labour market back to where it was before the pandemic. There is a new Kickstart Scheme to support jobs for young people, hoping to avoid a 'lost generation' entering the labour market during what will be one of the deepest recessions in centuries. To create new jobs, the Chancellor announced significant investment into new ‘green jobs’ for the recovery. He also announced the winding down of the furlough scheme in October, but with a new added ‘Job Retention Bonus’ incentivising businesses to retain furloughed staff until January 2021 in order to receive £1,000 per employee retained.
But it is likely that the hospitality and tourism sector will be most pleased with today’s announcements. To ‘protect jobs’ in this sector, the Chancellor announced the undeniably appealing 'Eat Out to Help Out' scheme where customers will be offered a discount up to £10 per head to eat out from Monday to Wednesday in August, as well as a VAT discount from 20% to 5% on most tourism and hospitality-related activities – hoping to incentivise the public back out and spending at pubs, restaurants, hotels and shops.
These proposals should go some way to avoid many businesses shutting their doors for good or making their staff redundant as the furlough scheme winds down. However, it is important to consider the quality of the jobs that are being protected.
According to the Hospitality and Tourism Workforce Landscape, 8% of the UK workforce is employed in the hospitality and tourism sector – 86% of whom are employed in a restaurant, pub or hotel related business. People working in hotels and restaurants are paid around 25% less than the UK average. There are also regional differences in average pay within the sector: in the North East wages are 42% lower than average, while in London they are 19% higher. The hospitality sector also accounts for one-fifth of the increase in insecure employment since 2011.
This is a sector with a higher-than-average vacancy rate (at 6%), which finds it difficult to retain staff due to low pay, lack of career progression, irregular hours, and insecure work: a return to ‘business-as-usual’ is not what we should be aiming for. The support package for the hospitality and tourism sector may help businesses stay afloat but, aside from keeping their jobs, it is unclear what further benefits might accrue to the employees in these sectors.
We know from our work analysing the local economic impact of COVID-19 that the places which have taken the biggest hit are places with the highest concentration of people and businesses working in the retail, hospitality and tourism sectors. This has been one of the reasons coastal areas have been so badly affected with a severe collapse in local spending and spikes in unemployment.
In order to build resilience in these places, we need to ensure that people have access to good jobs – and this means supporting social businesses that are willing to invest in the people who work for them. Based on research carried out by Social Enterprise UK and our own loan book, we know that the social economy:
- Provides more jobs by turnover compared with the private sector
- Creates jobs in some of the most disadvantaged areas
- Invests in its employees to improve the quality of their jobs
- Promotes employee participation and representation
- Is more likely to pay the living wage
- Is more likely to recruit staff locally
At SIB, we want to see a fairer recovery that focuses on employment, but importantly one that generates good jobs – jobs which are well paid; diverse and inclusive in recruitment, pay and promotion; and jobs which provide quality, longevity and support for better career progression. The Government should be exploring how to embed these principles across all sectors, but particularly hospitality and tourism, where precarity and high turnover must be replaced by quality and security: the social economy provides a powerful model for how this can be done.
This crisis has brought into stark light the failures of a labour market reliant on quantity over quality, with large numbers of people in atypical, low paid or insecure work. The recovery must not simply focus on protecting existing jobs, but on ensuring that people have access to good, secure jobs with decent pay and working conditions. Unfortunately, this is going to need more decisive action than a discounted lunch.
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