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Spending Review 2020: An employment perspective

25 November 2020

Read our commentary on the Spending Review announcement on unemployment, plan for jobs and national living wage increase. 

Joanne Frew, Head of Employment at DWF, comments on the Chancellor's announcements on unemployment, plan for jobs and national living wage increase.

"The Chancellor announced that unemployment is likely to rise to a peak of 7.5%, equating to 2.6 million people out of work, in the second quarter of next year. The upsurge to 7.5% represents a significant increase, with the most recent ONS figures showing the unemployment rate in the three months to September 2020 at 4.8%. However the spike predicted in 2021 is unsurprising considering the Coronavirus Job Retention Scheme (CJRS) is due to draw to a close in March 2021. At that point, any jobs which are not viable in the new economic climate will no longer be supported. With the CJRS no longer supporting notice pay, there may be fewer employers than expected giving notice whilst the CJRS is in place but we expect to see a significant number of redundancies once the scheme closes.  

"The average annual growth of the DWP's budget has been stated as 28.1% when compared to 2019-20. The 2021-22 funding for the Plan for Jobs, as part of a £1.8 billion uplift, will include various measures to help support people to find work. Focusing on medium to long-term strategies to help create and support jobs is of paramount importance when tackling unemployment. Employers have faced an incredibly challenging period and as part of business contingency planning, they will need to familiarise themselves with the various employment support schemes on offer from the government. Employers should carry out urgent reviews of labour supply across the workforce, to ensure business efficiency is maximised.  

"The Chancellor also announced an increase in the National Living Wage for individuals aged 23 and over by 2.2% from £8.72 to £8.91 from April 2021. This uplift follows recommendations from the independent Low Pay Commission, including a previous recommendation that the National Living Wage applies to those 23 and over from April 2021. Employers will need to budget for these increases in April 2021."
 

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