How pay factors will help shape recruitment and retention in a post-pandemic workforce

Disadvantaged young individuals are one of the most-affected demographics, and risk long-term damage to their financial prospects. With so many experienced people being made redundant, what steps should employers take to invest in young NEETs (Not in Education, Employment or Training) rather than taking the ‘easy’ option of employing a demonstrably experienced individual?

Young people are twice as likely to have been furloughed or lost their job than workers in their forties. And this is particularly concerning because of the risk of young people experiencing ‘scarring’ meaning that their employment and pay prospects can be affected for years to come as a result of time out of the workforce early in their careers.

Given that young people disproportionately work in sectors like retail and hospitality (which explains why they’ve been hit hardest), the Resolution Foundation proposes subsidising wages in these sectors through a new Job Protection Scheme. But we’re also recommending targeted job guarantees for young people. There’s evidence of this working well in the past – for example, the ‘Future Jobs Fund’ that was successful in the aftermath of the financial crisis.

There could be a trade-off between the quantity and quality of jobs created. Do you think that the recovery can provide both more and better jobs? And if yes, which are the key factors that would allow for such an outcome?

Job quality is definitely an important issue. In the decade following the financial crisis, two-thirds of the growth in employment came from ‘atypical work’, including self-employment, agency work, and zero-hours contracts – we can’t let that happen again.

The coronavirus crisis has highlighted the scale of low-quality jobs among key workers such as carers and delivery drivers. As we’ve argued before, now is the time to set out careful plans to improve the quality of work as the economy recovers, not least given the government’s welcome commitment to a new employment bill.

Supporting the labour market to get back to full strength as quickly as possible will help to make sure that workers don’t have to put up with poor working conditions. But we shouldn’t be complacent: as the labour market reached record pay and employment in recent years, zero-hours contracts remained at an all-time high.

More targeted policy interventions will help, too. For example, the government has some control over pay and conditions in the social care sector, given that it’s publicly funded. To reflect that, our costings for direct public investment in social care include increasing the sector’s pay to at least the real Living Wage, the voluntary rate that reflects the cost of living.

Do we have any understanding of how this crisis might affect others in the labour market? A rise in people interested in retiring? Retirement on medical grounds? Or will people work longer like in the financial crisis?

Our previous research does show that, while 18-24-year-olds have the highest rates of furloughing and job losses, over-60s been disproportionately impacted, too. There is a risk that older workers losing work will choose to retire and become economically inactive rather than re-entering work, which could hurt their living standards in retirement through lost earnings and pension contributions if they end careers before their time.

On the other hand, people worked more after the financial crisis, in a large part to make up for falling incomes. It’s too early to tell how people will respond to this crisis – but a comprehensive labour market response in the coming recovery phase will help to ensure that people don’t get shut out of the labour market by long-term inactivity.

These questions were posed during the Resolution Foundation’s The Full Monty: Facing up to the scale of the Covid-19 jobs crisis event on 29 June 2020. The recording of the event is available online.

Discover more about the legacy of COVID-19 on reward, employee benefits and financial wellbeing at REBA’s Employee Wellbeing Congress. Speakers include Paul Johnson, director of the Institute of Fiscal Studies who will be exploring what equality, fairness and responsibility mean for employees’ financial wellbeing.