COVID & Unemployment

The U.K. has a plan to pay businesses that hire young people

David Brancaccio, Victoria Craig, and Meredith Garretson Sep 4, 2020
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The goal is to create around 300,000 jobs and help train these entry-level workers. Pictured: U.K. Chancellor of the Exchequer Rishi Sunak at a Jobcentre Plus in London. Anthony Upton-WPA Pool/Getty Images
COVID & Unemployment

The U.K. has a plan to pay businesses that hire young people

David Brancaccio, Victoria Craig, and Meredith Garretson Sep 4, 2020
Heard on:
The goal is to create around 300,000 jobs and help train these entry-level workers. Pictured: U.K. Chancellor of the Exchequer Rishi Sunak at a Jobcentre Plus in London. Anthony Upton-WPA Pool/Getty Images
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The job market is terrible for adults with résumés. Imagine being a young person just starting out.

Here’s an idea: The government pays businesses cash if they hire young people. That’s just what the British government is doing. This week it launched a $2.5 billion “Kickstart” program.

The BBC’s Victoria Craig, who hosts the global edition of the “Marketplace Morning Report” from London, has more on this. She spoke with host David Brancaccio and the following is an edited transcript of their conversation.

David Brancaccio: So money changes hands in this new program. How does this Kickstart thing work?

Victoria Craig: It gives businesses about $2,000 for every six-month work placement they provide for people aged 16 to 24 who are on an unemployment benefit here known as Universal Credit. Now job centers are going to be the ones responsible for identifying people at risk of long-term unemployment and referring them to the scheme. Ultimately, the goal is to create around 300,000 jobs and help train these entry-level workers.

Many big businesses have already signed up. Dale Vince is the owner of one of those companies. It’s in green energy company called Ecotricity. He told the BBC his business could likely create several dozen jobs. But he worries about the implementation.

Dale Vince: We reached out to our local Job Center to say, look, how’s this going to work? And they said, actually, they didn’t know, they weren’t in the loop. We’ve not heard back. So it seems like the details of the policy have not been communicated to local job centers.

Brancaccio: And the U.K. has tried a version of this before, right? What’s the track record in getting young people working?

Craig: Yeah, so in the aftermath of the 2008 financial crisis, the U.K. launched a program called the Future Jobs Fund. And the biggest problem for young people is that the longer they’re unemployed, the worse their longer-term pay prospects are. And that can cause a drag on society in the country’s economic prospects overall. So academic research shows, and the think tanks that we spoke to say, that these types of programs do help combat this problem.

Critically, with this scheme that the government has launched this week, for businesses to be able to get the funding they have to prove that they’re actually creating jobs and not just laying off older workers to make way for newer younger ones. The question though, is going to be whether this program goes far enough. Thousands of young workers work in hospitality and retail and they’ve been furloughed, so they’re the ones at risk of permanent unemployment because of the coronavirus pandemic.

COVID-19 Economy FAQs

Millions of Americans are unemployed, but businesses say they are having trouble hiring. Why?

This economic crisis is unusual compared to traditional recessions, according to Daniel Zhao, senior economist with Glassdoor. “Many workers are still sitting out of the labor force because of health concerns or child care needs, and that makes it tough to find workers regardless of what you’re doing with wages or benefits,” Zhao said. “An extra dollar an hour isn’t going to make a cashier with preexisting conditions feel that it’s safe to return to work.” This can be seen in the restaurant industry: Some workers have quit or are reluctant to apply because of COVID-19 concerns, low pay, meager benefits and the stress that comes with a fast-paced, demanding job. Restaurants have been willing to offer signing bonuses and temporary wage increases. One McDonald’s is even paying people $50 just to interview.

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Can businesses deny you entry if you don’t have a vaccine passport?

As more Americans get vaccinated against COVID-19 and the economy begins reopening, some businesses are requiring proof of vaccination to enter their premises. The concept of a vaccine passport has raised ethical questions about data privacy and potential discrimination against the unvaccinated. However, legal experts say businesses have the right to deny entrance to those who can’t show proof.

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