A rapid economic recovery for those who need it most
Nesta Challenge’s new prize seeks scaleable ways of giving vulnerable workers better access to jobs and financial help in the wake of COVID-19. Guest blog by Ravi Gurumurthy, Chief Executive Officer at Nesta.
When the Government’s Coronavirus Job Retention scheme ends at the end of October, the catastrophic economic impact of COVID-19 will begin to unfold.
4 in 10 workers in the hospitality industry are currently furloughed, and 1 in 10 workers in non-essential retail. While the UK has already been facing the closure of particular industries and large employers, the coming labour market shock will be unprecedented in scale.
Many workers will have to shift occupation, either because some sectors remain mothballed due to COVID or as a result of longer-term structural changes in the labour market – in particular, the decline of retail. While undergoing training within the last year significantly increases the likelihood of getting a job, this effect is almost eradicated when workers are attempting career shifts across industries. Few people re-enter full-time education, yet this is far more likely to act as a bridge into new fields of work than short-term training.
Navigating the labour market minefield will be challenging, particularly for workers in insecure and low-paid employment. Over the past decade, a range of online products and services have emerged but some basic needs are still not well met. For vulnerable workers, it is hard to find services that reliably link them to roles that match their particular skills, interests and experience or to training and education courses that provide the best return. In particular, it is hard to find a service that will identify specific job opportunities in industries adjacent to those in which you have experience and also the training or education that will help you make this transition.
‘There is a major risk of people being unable to meet their housing or food costs and falling into debt.’
With millions of workers set to face extended spells of unemployment, there is a major risk of people being unable to meet their housing or food costs and falling into debt. For example, an estimated 12 per cent of people with mortgages would fall into low or negative equity if house prices fall by 16 per cent, according to the downside scenario in the Office for Budget Responsibility’s latest forecast.
A range of financial services already exist to support vulnerable families – from financial assistance packages and budget planning to affordable credit. However, the scale and accessibility of these services are out of kilter with what is now required. There is an urgent need for products and services that can help families build savings easily, enable them to access the financial assistance that exists already, provide tailored advice and support, and give much greater access to affordable credit.
To stimulate such innovation both in the fields of employment and skills and financial services, we’re launching the Rapid Recovery Challenge. The Challenge, funded by Nesta in partnership with JPMorgan Chase Foundation and Money and Pensions Service, aims to stimulate and support new ideas that have the potential to help people who have been hardest hit.
In many of the Challenges that Nesta Challenges holds, we assume new products and services will take their time to grow and scale. This Challenge is unusual because we are seeking solutions that can rapidly scale to meet the urgency of the current need – whether by redirecting existing products for the benefit of economically vulnerable workers or by accelerating the scaling of existing high-impact solutions.
‘COVID-19 is turning from a health crisis into an economic catastrophe.’
By incentivising innovation with financial awards, capacity building, expert training and a broad distribution campaign, the Rapid Recovery Challenge – with a prize fund worth £2.8 million – aims to accelerate product development and get solutions into the hands of people who need them as quickly as possible.
We will award 12 participants an initial prize, based on plans to scale their products to 10,000+ users. Depending on their progress, up to six finalists will later be awarded more funds to help reach a further 50,000 users. The whole process will take a year, with the aim that the solutions supported by the prize will ultimately reach one million people in the UK by 2023.
COVID-19 is turning from a health crisis into an economic catastrophe. The scars may affect a generation of people pushed out of the labour market and into financial strife. We are confident there are innovators with products and services under development that could make a profound difference, if we can accelerate their path to market. We hope the Rapid Recovery Challenge stimulates and supports them to do so.