UK Economic Recovery Plan: Strategies to Combat Unemployment (2022)

This report presents an economic recovery plan for the UK, addressing the high unemployment rate following the pandemic. The plan, grounded in Krugman's economic principles, focuses on four key strategies: providing opportunities for employment recovery through job retention bonuses, VAT cuts for tourism and hospitality, and the Kickstart job scheme; investing in employment support, training, and apprenticeships to create new job opportunities and boost business capabilities; addressing structural changes in the economy by focusing on skills development to match technological advancements; and tackling frictional unemployment by reducing unemployment benefits and improving job matching websites. The aim is to reduce unemployment, increase demand, and foster economic stability in the UK.

Unemployment in UK
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Table of Contents
REFERENCES................................................................................................................................6
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There is high rise in UK unemployment rate since pandemic. It has affected on
economic growth. Due to pandemic the overall economic growth of UK has adversely affected.
This is because of various factors such as rise in unemployment rate, decrease in demand,
decrease in household income, etc. (Krugman, & Wells, 2020) However, in UK there is high rise
in unemployment rate in UK.
It is found from above graph that in 2020- 21 the unemployment rate is 4.8%. this is found
in people of age 16 years and above.
Thus, it requires to develop a recovery plan strategy in order to reduce unemployment rate in
UK economy. The plan will help to recover economic growth of UK. Thus, the plan is based on
4 points which are defined as below :
Here, first is that UK will provide various opportunities to people and business to recover
employment. In that various measures are taken (UK unveils economic recovery plan to create
jobs, 2020). They are as below :
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The gov will provide job retention bonus of 9 billion pounds for firms for retaining of
employees.
There is VAT cut on tourism and hospitality up to 5% till Jan 2021.
The scheme of Kick start job where state will pay up minimum wage to 300, 000 people of age
16- 24 for 6 months.
This is required in economy because it will reduce burden of tax from business.
Moreover, the companies will be able to retain staff and not lay off. Besides that, providing of
wage of people result in increasing demand in economy which led to improve economic growth.
this will accomplish UK economy in terms of reducing unemployment rate.
A plan for job is recovery plan to secure UK economy from unemployment and pandemic
in which there are 3 stages. The first is fund of £160 million is provided to public services to pay
wage of 12 million people.
A Job Retention Bonus will be introduced to help firms keep furloughed workers. UK
Employers will receive a one off bonus of £1,000 for each furloughed employee who is still
employed as of 31 January 2021 (Gov. UK, 2020). A £2 billion Kickstart Scheme will also be
launched to create hundreds of thousands of new, fully subsidised jobs for young people across
the country. £1.6 billion will be invested in scaling up employment support schemes, training
and apprenticeships to help people looking for a job. It is required because it will create large
number of opportunities for firms and start ups to offer jobs to people. Moreover, providing
financial support to business will increase their capability to pay wages to staff. This will result
in boosting up economic growth of UK as employment increases. Thus, demand of essential
goods will rise in market that led to increase in production and generating revenue. Hence, this
brings in economic stability in UK economy as unemployment rate reduces and demand
increases.
Structural change in economy is the one of the major reasons behind the unemployment
which is being faced by the UK economy and this mainly occurs due to the rise and fall in
industry after the emergence of new technology and innovation which results into changing the
demand of the business. This is the most essential area to eb included within the UK economy
recovery plan pertaining to the increasing unemployment. This is generally incurred due to the
mismatch in the skills which is usually caused due to the change in the technology and way of
carrying out the task. This results in creating unemployment as the existing skill sets of the
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people does not meet with the future requirements of the business. This can be made possible
and tackled in only two ways, one is either to prevent the technological progress along with the
associated benefits attached to it or by implementing such practices or the training and
development opportunities of the existing employees which provides them with the ample
chance to meet with the technological changes of the business. This will result into looking at
the positive side which will result into creating jobs by that technology. This recovery plan can
be further evidenced with the Keynes theory of employment which states that the unemployment
caused due to the insufficient amount of expenditure being incurred within an economy. This is
considered as the best way to pull the economy out of recession through the way of infusing
economy with capital.
Tackling with the frictional unemployment which basically accounts for the
unemployment which occurs from the inevitable delay in time in finding for the new
employment within the free market. Short term unemployment can even have huge effect over
the unemployed which would result into causing the household with the limited or restricted
amount of savings which might end up into more debt. This also results into reducing the
confidence of those without work and can be stressful. Therefore, the UK unemployment
recovery plan incorporates the frictional employment (UK economists’ survey: recovery will be
slower than in peer countries. 2021). This can be made possible through the way of reducing the
unemployment benefits as less the benefits will prompt or encourage the individual to take up the
job quicker but in the other hand, it might lead the people to take up any job that not even suits
their skills. The UK government provide the well-structured internet job matching website which
is having the potential for offering the quicker jobs vacancies information with the relevant skills
required for the unemployed. The government database will be comprehensive in respect to all
the positions and industries, then it will result into making it easier for the people or workers to
find the appropriate job and apply the same. This recovery plan will help in minimising the
problem of unemployment caused to the job searching resulting into reducing unemployment
rate of UK economy.
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REFERENCES
Books and journals
Krugman, P. & Wells, R., 2020. Essentials of Economics, 5th ed. New York: Worth Publishers.
Pp. 285-314.
Online
UK unveils economic recovery plan to create jobs, 2020. Online [available through]:
https://newseu.cgtn.com/news/2020-07-08/UK-announces-raft-of-measures-to-boost-
economy-ravaged-by-coronavirus-RXPwQrPH68/index.html
Gov. UK, 2020. Online [available through]: https://www.gov.uk/government/news/rishis-plan-
for-jobs-will-help-britain-bounce-back
What Is Frictional Unemployment? 2020. [Online]. Available Through:<
https://www.thebalance.com/what-is-frictional-unemployment-examples-causes-rates-
3305517>.
UK economists’ survey: recovery will be slower than in peer countries. 2021. Available
Through:< https://www.ft.com/content/21abdaf0-b3b6-4cf9-93f2-007fc1b1b1c8>.
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