TSUNAMI OF LOST JOBS
4.6% unemployment could more than double 16-25 must be guaranteed work Government should take a stake in struggling firms
SCOTLAND faces a “tsunami of unemployment” in the aftermath of the coronavirus.
Government advisers issued the warning after the country’s economy shrank by a third since lockdown began.
They are calling on the SNP to guarantee jobs for 16 to 25-year-olds and to take a stake in struggling firms.
YOUNG people would be given a job under plans by Government advisors to prevent an unemployment “tsunami”.
The Advisory Group on Economic Recovery said 16 to 25-year-olds must be guaranteed two years of work paid at the real living wage.
The group, chaired by Benny Higgins, also called for the Scottish Government to take a stake in struggling firms.
Covid-19 has led to hundreds of thousands of workers either losing their jobs or being placed on furlough.
Figures show the unemployment rate in Scotland has soared to 4.6 per cent – about 127,000 people.
Higgins’ group, set up by Nicola Sturgeon, yesterday produced an “education-led” report on how to get the country back on track.
The group estimated there would be a 33 per cent fall in Scottish GDP for the months when physical distancing was in place.
A key recommendation for economic recovery is business and Government leading on a “Scottish jobs guarantee” for young people.
It stated: “The scheme should offer secure employment, for a period of at least two years, to 16 to 25-year-olds, paid at the living wage, with access to training, apprenticeships and the possibility of progression.”
His team backed investment in digital technology and a cut in VAT to help the tourism industry. The group also called for the Scottish Government to secure “ownership stakes” in companies vital for the economy.
Higgins said he feared the current unemployment rate of 4.6 per cent could double: “By the year end, you could be starting to get comfortably into double digits in terms of percentage unemployment.”
He added: “What we have got to do is take steps to ensure it is mitigated as far as possible.”
Higgins said: “The potential tsunami of unemployment requires urgent intervention. In particular young people aged 16 to 25 are at risk of long-term scarring from the imminent recession.”
He also backed Sturgeon’s call for furlough to last longer than planned, adding: “I would favour an extension of furlough, but probably on a much more targeted basis.”
Higgins said at least £6billion in stimulus money is needed for the Scottish economy to recover.
He added: “If Germany needs four per cent of its economic output to stimulate the economy, then you would think that we would need at least that.
“That’s £6billion and the current limit through the fiscal framework is £450million so there’s a long way to go from where we are to where we need to be.”
The First Minister welcomed the report and committed to responding by the end of July. She said: “The Scottish Government sees this report as a serious and substantive piece of work and we agree with its basic principles.
“Many of its themes – for example the importance of education, employment and tackling inequalities – are clearly going to be critical to our economic recovery.”
The First Minister also described the recommendations as “significant and constructive”.
Tracy Black, CBI Scotland director, said: “The Advisory Group on Economic Recovery correctly identifies a jobs-first recovery and building resilience as the top two
immediate priorities for the Scottish economy, something we raised in a recent letter to the First Minister.
“Urgent interventions are required to create jobs, especially for young people affected by significant disruption to the labour market, and to catalyse investment – either from home or abroad.” Roz Foyer, STUC General Secretary Designate, said: “There is much in this report to recommend, but we would ask the Scottish Government not to limit their ambitions for the Scottish economy and go far further on developing public ownership models and investing in the supply chain required for greening our economy. We are pleased to see the strong emphasis on support and intervention within the economy and we are clear that there can be no return to the austerity politics of the past.”
Scottish Labour leader Richard Leonard said: “I welcome this report, and in particular its recognition that Scotland needs a jobs guarantee scheme, which has been Scottish Labour’s central message since the economic impact of Covid-19 became clear.
“The Government’s independent advisers also recognise that Scotland had vast inequalities long before Covid-19, and that our economy has long been in a fragile state thanks to SNP cuts and complacency.”
Scottish Tory MSP Maurice Golden said a decade of economic incompetence from the SNP was coming back to haunt the country.