Covid-19 has brought us one of the worst unemployment crises in recent history. This crisis has eliminated or put on hold millions of jobs, particularly affecting youth, women, ethnic minorities, and those in “low-skilled” jobs. As governments provide much-needed structural assistance to support the unemployed and stimulate the economy, they should also consider behavioural approaches to help people navigate the unemployment crisis, invest in professional development, and get back into work.
This time is different
This jobs crisis may just be getting started, and the damage will likely be lasting. The initial impact on employment and hours worked is estimated to be 10 times that of the 2008 crash in the OECD. Unemployment is expected to increase to 9.4%-12.6% across OECD countries by the end of 2020 and remain high. Many of the employment losses are yet to come. Nearly a third of British firms expect to reduce their headcount in coming months, for example.
Covid-19 has also hit businesses hard, forcing many to either adapt or disappear. Entire sectors have quickly become unviable, and firms and workers alike are under pressure to change the way they work. While firms are expected to speed up automation, workers are working remotely at unprecedented levels. These changes have likely left many behind already. Even as restrictions are lifted, many firms will not be able to simply bounce back, leaving many jobs in limbo.
To respond to these challenges, we would like to suggest a few behavioural approaches that should complement more structural efforts to support jobseekers.
Help people invest in their professional development while opportunities are scarce
As jobs will likely be in short supply for a while, assistance for the unemployed should highlight how they might invest in their progression in the meantime.
For instance, people could be directed towards promising training opportunities – ideally short, high-quality courses freely available online. Evidence suggests that boosting learners’ confidence in their ability, helping them see the value of training, and reducing choice overload (for instance through simple tools to match individuals to relevant courses) can increase uptake and completion of training. For example, BIT has found that reassuring people that it is normal to worry about their ability can double sign-up rates for online study modules. Such insights could help jobseekers identify and complete professional training.
Help people explore new job opportunities
There is a risk that jobseekers will focus their search too narrowly, considering only jobs that look like those they held before, which may be disappearing. Besides making digital unemployment systems as user-friendly as possible, we must make it easier for people to consider new occupations and improve how they are matched to opportunities.
Behavioural insights can help people understand what other sectors their skills are suitable for. Interactive tools could highlight recommendations based on information about skills, previous roles, and work style preferences, building on digital search tools such as those being tested in Australia and Michigan. At BIT, we have designed simple online supports for jobseekers, which increased the chances of finding jobs and improved the quality of matches in Australia.
To encourage a broader job search, hiring employers and job boards should also provide more information. Knowing about predictability of hours, flexible work options, pay, and progression opportunities will help jobseekers make better decisions for themselves. At BIT, we found that prompting employers to provide more transparency around flexible work options significantly increased application rates.
Encourage firms to participate in government support schemes and support employment
Some countries are rolling out incentives to get employers to hire people back, such as the UK’s new Kickstart Scheme. Their success will depend on how well understood the incentives are and how easy they are to take up. Small businesses in particular will have limited time and bandwidth to navigate complex new initiatives. We have explored this issue in depth. For instance, we were able to increase the engagement of British businesses with the apprenticeship levy by clearly highlighting the business benefits. In Australia, we simplified processes to get employers to take up wage subsidies and reframed government communication to reduce potential employer bias against applicants. Getting employers to engage with incentives and hire workers during this crisis will require seeing things from their perspective.
Many businesses will likely continue to struggle due to low demand and health-related restrictions. As wage subsidy and furlough programmes expire, businesses that cannot afford to keep all of their workers full-time should consider retaining as many as possible at reduced hours, effectively embracing part-time working by default. This could support both employment and wellbeing, as even just regaining some working hours restores much of the wellbeing benefits of being employed. Making more roles (and particular senior positions) available part-time would also help reduce gender inequality.
We are probably just at the beginning of this unemployment crisis. Responding to it successfully will take a comprehensive and thoughtful approach. Behavioural insights like those mentioned above can make structural unemployment assistance and economic stimulus more effective.