More generous unemployment benefit should be a key feature of the post-COVID social security system, says CPAG

Job Retention Scheme would not have been necessary but for the 'inadequacy of the existing social security system'

A more generous unemployment benefit should be a key feature of the post-COVID social security system, the Child Poverty Action Group (CPAG) has argued.

Following the announcement on 12 May 2020 that the Coronavirus Job Retention Scheme (CJRS) is being extended for a further four months until the end of October 2020, Senior Policy Analyst at CPAG Tom Lee suggests that the emergency measures put in place in response to the coronavirus (COVID-19) pandemic were necessary only because of the inadequacy of the existing social security system. Advocating a much more generous unemployment benefit post-COVID, Mr Lee argues that this would help to stabilise the economy in times of uncertainty, and play a significant role in helping to reduce and prevent poverty.

Making comparisons with both the CJRS and approaches taken by other European countries - which have demonstrated how much more generous schemes can work with a functioning labour market - Mr Lee sets out the key features of what a more effective unemployment benefit might look like - 

• while the CJRS and most European countries link the amount received to past earnings (up to a threshold), there is a strong argument that everyone should be treated the same in their time of need and not give more to previous high earners - the important thing is to hold people close to the labour market, so re-entry is made easier;
• although support via the CJRS is provided through employers, post-COVID the social security system has the necessary infrastructure in place and would be best placed to administer such a scheme;
• while any post-COVID unemployment benefit scheme would be likely to have some restrictions on eligibility, it should not exclude people arbitrarily or discriminate unlawfully - for example, consideration would need to be given to the position of women who may spend more time out of the formal labour market as a result of caring for children; and
• a workable version of a post-COVID unemployment benefit scheme is likely to need some restrictions on the amount of time people can claim for in order to keep costs down and make sure workers have an incentive to search for their next job  - however, it should also be long enough to avoid the pressure to choose the first available job, regardless of whether it is a good match or not.

Concluding that there is no reason why more generous unemployment benefits couldn’t exist in the UK permanently, Mr Lee says - 

'The unprecedented number of people facing unemployment as a result of COVID-19 makes the time right to re-examine our inadequate unemployment benefits and put in place more effective support systems that provide greater security for workers in their time of need. This is an essential component of a stronger, more effective social security system, one that can provide a secure future for children and families.'

For more information see Unemployment support post-COVID: learning from the job retention scheme from cpag.org.uk