Region facing full blown jobs crisis, warns MP Pat McFadden
The West Midlands has been left facing a "full blown jobs crisis" as a result of the coronavirus pandemic, a senior Labour MP has warned.
Shadow City Minister Pat McFadden said the rise in the number of people claiming benefits in recent months showed that urgent action was required to avoid the "awful consequences of mass unemployment".
He says the situation is likely to get worse once the Government's furlough scheme starts to wind down in the coming weeks, and suggested brining in targeted support for sectors of the economy hardest hit by lockdown measures.
Around one third of the workforce in the West Midlands have been on Government wage support schemes during the pandemic, while in parts of the Black Country the number of people claiming benefits including Universal Credit has risen sharply.
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Figures from the House of Commons Library show that in Mr McFadden's Wolverhampton South East constituency, 11 per cent of people aged 16-64 claimed benefits in June, against a national average of 6.3 per cent. The claimant figure of 6,385 was 2,460 higher than before the start of the lockdown in March – an increase of 63 per cent.
Mr McFadden said: "These figures show that what began as a public health crisis is now a full blown jobs crisis – and that is before the furlough scheme begins to unwind from 1 August.
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"The claimant count in my constituency is now running at 11 per cent – a level not seen for many years. And the danger is that as employers have to contribute more to the furlough scheme they begin to let more people go.
"That is an argument for targeted sectoral support aimed at those businesses based on face-to-face contact and bringing people together which have been particularly hard hit by the social distancing measures necessitated by the Covid crisis.
"We know from the past the huge economic and social problems caused by high levels of unemployment. Government has made big interventions in recent months but there is a lot more to do if we want to avoid the awful consequences of mass unemployment that we have seen in the past."
The Government's budgetary watchdog, the Office for Budgetary Responsibility, this week warned that unemployment in the UK could hit four million for the first time ever. It was 1.3 million in 2019.
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Corin Crane, chief executive of the Black Country Chamber of Commerce, echoed Mr McFadden's concerns, calling for the Government to give continued support to the region's businesses to prevent further redundancies.
Mr Crane said: “As Covid-19 gripped the nation’s economy, unemployment began to rise at the same time as vacancies have plummeted. This research shows that coronavirus continues to ravage the employment and jobs market across the Black Country and that the Government’s efforts to protect, support and create jobs is going to be needed now more than ever in the coming months.
"Research conducted by Indeed and Centre for Cities, published yesterday, shows that competition for jobs has risen most in places where work was already difficult to find. Many businesses are struggling with cash flows, reduction in demand and changes to the way they operate with increased levels of home and flexible working.
"Businesses here in the Black Country need continued support ahead of the Chancellor’s autumn budget to minimise the ever-increasing costs of employment and prevent further redundancies in the long run. It goes without saying that the chamber is on hand to support anyone facing redundancies and those looking to start their own business.”
New research has found that 28 per cent of businesses decreased the size of workforce between April and June but 66 per cent kept their workforce constant, reinforcing the success of the Job Retention Scheme.
