Responding to Office of National Statistics (ONS) statements this week, the Work Foundation said: “Having proven during the pandemic that government intervention in the labour market can successfully mitigate the impact of an economic crisis on businesses and workers’ lives, the new prime minister should lead on timely and strategic interventions this autumn.”

The ONS figures show that real wages are worth a “record” 3% less than they were a year ago, “the cost-of-living crisis is biting, and worse is looming”, the Work Foundation said in a paper entitled ‘What should the next Prime Minister prioritise to prevent a labour market crisis?’. 

The backdrop for the Work Foundation’s recommendation, along with ONS statistics, is based on Bank of England expectations that inflation will rise to 13% later this year from the current 9.4%, and “warns that unemployment is set to rise”. 

With energy price caps due to rise again in October to £3.5k and in January 2023 to £4,266, many households will experience even greater financial strain than they are currently, the Work Foundation report pointed out. 

“Although the previous chancellor [Rishi Sunak] has provided two one-off payments to ease cost of living pressures over summer, the forecasts for energy prices and inflation have changed significantly since that package was introduced,” the Work Foundation said.

Considering the revised forecast, the Work Foundation urged, “this will not be enough and should prompt the new prime minister to consider a longer-term approach to managing the economy’s impact on households”.

Writers for the Work Foundation Heather Taylor and Rebecca Florrison went on to say that the UK response to the pandemic had shown that government interention in the labour market, such as the Coronavirus Job Retention Scheme (CJRS or furlough) “played a key role in mitigating the impact of the economic fallout on both businesses and workers”. 

“The new prime minister,” they urged, “should consider bold policy intervention to head off the forecast labour market crisis and offer certainty and stability to workers and employers alike.”

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