£100m to fight looming unemployment crisis

Young people are expected to be disproportionately affected

The Scottish Government has announced a £100 million support package to stem the looming unemployment crisis, amid fears the rate could return to levels not seen since the 1980s.

There were 47,000 fewer people in work in May than in March, official statistics show, a direct impact of the coronavirus shutdown.

Over the same three months, the country’s unemployment total rose by 15,000 to stand at 120,000.

With the UK Government’s furlough scheme due to end in October, it is feared worse is yet to come.

The Fraser of Allander Institute has warned of a “substantial” jump in unemployment once furlough ends, which would be felt hardest by younger people.

Economy Secretary Fiona Hyslop presented the government’s response to the latest labour market statistics via a virtual meeting yesterday afternoon.

She said: “We are potentially facing unemployment on a scale not seen for decades as a result of coronavirus.

“The announcements show that we are ready to rise to this challenge with investment to help ensure that people who have lost jobs, those at risk of unemployment and young people entering the labour market can benefit from more and better job opportunities.

“This crisis is having a significant impact on our young people and we need to act quickly to protect their future.”

She said she had asked Sandy Begbie, who led the Developing the Young Workforce Group that played a pivotal role in the delivery of the Edinburgh Guarantee to young people, to develop an implementation plan for a job guarantee for young people, as recommended by the Advisory Group on Economic Recovery. More detail will be provided in early August.

Ms Hyslop said the extension to Fair Start Scotland will also provide stability and continuity to the most vulnerable and those furthest from the labour market, including people with disabilities, health conditions and those who are long-term unemployed, to help them progress into work.

Dr Stuart McIntyre, head of research at the Fraser of Allander Institute, said yesterday’s figures were an “early warning” of what is to come.

He said: “The data today shows that the headline unemployment rate in Scotland stayed relatively low by historical standards at 4.3%, although the number of people unemployed is up 28,000 on a year ago.

“Meanwhile the employment rate remained at a high rate of 74.1%, although employment is 53,000 lower than a year ago.

“That said, and even with the recent falls in employment and rise in unemployment, we know that these numbers are not a full reflection of the employment situation facing workers in Scotland at the moment or are likely to face in the coming months.”

He said data showed that in Scotland 30% of employments, translating to 737,000 jobs, have been furloughed by businesses using the UK Government’s Coronavirus Job Retention Scheme, and 155,000 claims have been made by self-employed workers to a similar initiative.

“The emerging data from the welfare system is an early warning of the scale of the challenge ahead, with a doubling in the claimant count rate since this time last year,” he said.

Economy Secretary Fiona Hyslop.