Britain produces too much of relatively low value compared with many of its western counterparts. This is despite the country being a world leader in many industries. It is the country’s perennial productivity problem.

Improving skills supply is seen as one of the principal means by which the country’s productivity levels will be raised. But what does improving skills supply mean? Sometimes it seems to refer to matching – if only it were possible to ensure that skills supply better matched the jobs available matters would improve. And sometimes it refers to raising the level of skills, even if there is a degree of uncertainty about how much demand there is for any additional higher skills. If Britain, or more precisely England, is to increase its productivity through the improved supply of skills - however that might be defined - it might well need a bold, new skills strategy to do so. Does the latest Skills for Jobs White Paper fit the bill?

The nationwide lockdown in India hit migrant workers particularly hard and once travel restrictions were lifted, 11 million interstate migrants returned home. In this blog, Bhaskar Chakravorty, IER PhD student, and colleagues, present key findings from a telephone survey of young people from Bihar and Jharkhand who were trainees of a large skill-based training programme, titled ‘Deen Dayal Upadhyay Grameen Kaushalya Yojana’ (DDU-GKY) in India. It places disadvantaged rural youth into formal salaried jobs in manufacturing and services, often in urban areas in other states. The survey findings focus on the impact of the lockdown on interstate migrant workers and their willingness to migrate again in the future. Read more here.

The Job Support Scheme announced by the Chancellor of the Exchequer on 24^th September is a form of short-time working subsidy found in countries such as Germany and France. If an employee’s working hours are reduced and thereby their pay, the state will make up a third of the lost earnings and the employer a further third. In summary, the scheme is designed to distribute available work over a larger group of workers than would be the case otherwise thereby helping to offset any increase in unemployment resulting from the pandemic.

There is something unusual in the Job Support Scheme: it potentially increases the employer’s labour costs. Take the following example as an illustration.

Someone working 40 hours a week for ₤12.00 an hour has their hours of work reduced to 24 a week. This means that the weekly wage will reduce from ₤480 to ₤288. The employer will pay a third of the employee’s lost earnings (₤64) and the state a further third. The impact of this is to increase the employee’s hourly rate from ₤12.00 to ₤14.67; an increase of 22 per cent. If this were maintained over six months, to when the scheme is currently scheduled to end, the employer will have ended up paying an additional ₤1,651 to the employee for hours worked.

It is hard to escape the fact that it will be cheaper for the employer to retain as many employees working their usual hours and not use of the scheme, and make the others redundant. Of course redundancy costs and potential income from the Job Retention Bonus for previously furloughed employees may offset the employer’s additional hourly labour costs from using the scheme. Plus the employer will retain a full complement of skilled employees to take advantage of the eventual recovery thereby avoiding future recruitment costs or those which result from difficulties finding people with the right skills.

Nevertheless, the potential effectiveness of the Job Support Scheme would appear to be finely poised between success and failure simply because it requires employers to increase their hourly labour costs.