WBG response to Chancellor’s ‘economic update’:

WBG response to Chancellor’s ‘economic update’: Investment welcome but insufficient as WBG data shows investment in care could create over 2 million jobs

 Speaking in response to the Chancellor, Rishi Sunak’s ‘economic update’, Dr Mary-Ann Stephenson, Director of the Women’s Budget Group said:

“We were hopeful for a care-led recovery and a green recovery, but both areas were a massive missed opportunity. The Chancellor has taken a broad-brush approach government plans to rebuild the economy after the pandemic. The measures announced today do little to support victims of domestic violence, NHS workers and social care staff, people with disabilities or low-income families.

We welcome the additional investment announced by the Chancellor to address youth unemployment and create green jobs. But the scale of investment is insufficient to meet the crisis the UK is facing and will not create the number of jobs that are needed. Our research shows that investment in care could create over 2 million jobs, far more than any of the schemes announced by the Chancellor.

The job creation scheme for the under 25s is a welcome recognition that young workers have been particularly badly hit by the lock down. Research by IFS shows that 30% of 18-24 year olds have been furloughed, 10% have lost their jobs and 4% lost hours and pay. Youth unemployment has a scaring impact on young people’s life chances. Over a third of young women worked in lock down sectors that are particularly likely to see redundancies.

But it is important that this investment targets the huge gender gaps in apprenticeships. Research for our Commission on a Gender- Equal Economy showed that women are 84% of those on health and social care apprenticeships and 93% of those on childcare apprenticeships, while men are 97% of those on construction  apprenticeships. The Young Women’s Trust has highlighted the continued pay gap in apprenticeships – with average pay in female dominated sectors like hairdressing and childcare (£161 and £206 a week) significantly lower than £289 for engineering and £290 for electro-technical apprenticeships, both of which are heavily male dominated.

It is important that any traineeships include real training opportunities and be available part time for those with caring responsibilities. The scheme should also target the care sector in particular, both to create jobs and ensure that childcare is available for young people on the scheme who need it.

We also welcome the investment of £3bn to upgrade buildings and create ‘green jobs’, but this is a sticking plaster that fails to address the scale of either the employment or climate challenge. The German government’s pumping £36 billion into climate-cutting, economy-boosting measures and France is throwing £13.5 billion at tackling the climate emergency. Even with investment on this scale it is unlikely that the jobs created from investment in priority green infrastructure alone will be sufficient to ensure that unemployment falls back to 2019 levels by the end of 2021.

Neither of these schemes are sufficient to tackle the crisis in jobs that the UK is facing. Both the child care and social care sector are warning of large scale closures. Our research finds that investment in social infrastructure, including childcare and social care would be the most effective way to stimulate employment, reduce the gender employment gap and counter the inevitable economic recession as the UK comes out of lockdown. Over 2 million jobs could be created by investing in childcare and social care, 2.7 times as many jobs as the same investment in construction.

As the furlough scheme is rolled back a 1k bonus for employers for every employee they take back will do little to mitigate the  inevitable redundancies in sectors like retail and hospitality. Since women are the majority of workers in these sectors, they are likely to be the first to lose their jobs. The chancellor must provide a more detailed outline on how this will be countered in any job creation/ apprenticeship schemes

As well as investment in social infrastructure Government should target financial support at the people who need it most. Over 1.1million households look set to be pushed into poverty by the end of the year, with the number of children living in poverty increasing to 4.5 million. 230,000 renters are at risk of eviction when the freeze on evictions is lifted. To tackle this the Chancellor should have increased the National Living Wage, increased local housing allowance rates to average rents, and increased universal credit as well as raising Child Benefit to £50 a week.

Over two million workers have no entitlement to statutory sick pay, leaving them without support if they have to self isolate after being in contact with someone with Covid 19. Women are 50% more likely than men to be ineligible for SSP. Financial hardship caused by low levels of SSP is a serious disincentive to self-isolate. An increase in the coverage and level of SSP is vital to avoid the risk of a second spike.

The Government has demonstrated unprecedented agility in responding to the economic impact of the Covid-19 outbreak. But in order to build back better we need a major investment in social infrastructure to create jobs and provide much needed services, and targeted support through social security at those who need it most.”

For more information contact The UK Women’s Budget Group:  

Thaira Mhearban: thaira.mhearban@wbg.org.uk / 07838 222067/ Communications Officer

Dr Mary-Ann Stephenson: maryann.stephenson@wbg.org.uk / 07957 338582/ Director

Notes to Editors

The UK Women’s Budget Group (WBG) is an independent network of leading academic researchers, policy experts and campaigners who analyse the gendered impact of economic policy on different groups of women and men, and promote alternative for a gender-equal future.

Research on a care led recovery was carried out in June 2020 by Professor Susan Himmelweit and Dr. Jerome De Henau, members of WBG. Using Eurostat data, it was possible to model the relative employment effects of investment in care and construction. The full report can be found here.

Table 1: Total employment effects (direct, indirect and induced) per amount invested in different industries

Source: calculations by Jerome De Henau for WBG based on data from Eurostat

Table 2 The employment effects of investing 1% GDP in the care and construction industries.

Source: Calculations by Jerome De Henau for WBG, based on 2015 data from Eurostat

Table 3 The FTE employment effects of investing 1% GDP in the care and construction industries, with matched wages.

Source: Calculations by Jerome De Henau for WBG, based on 2015 data from Eurostat

Table 4 Raising employment in care to 10% of employed population: employment generated and spending required under various wage scenarios

Source: Calculations by Jerome De Henau for WBG, based on 2015 data from Eurostat

Chart 1. Employment effects of investing the same net amount in care and in construction

Source: Calculations by Jerome De Henau for WBG, based on 2015 data from Eurostat