Coronavirus and the Labour Market: Impacts and Challenges

Coronavirus is a public health crisis and the Government has rightly taken unprecedented measures to tackle it. This has included significant restrictions on much social interaction and economic activity.

The result has been the sharpest spike in unemployment on record. There were one million claims for Universal Credit in a two week period, 7.3 times higher than the same period one year ago. Gains in employment over the last five years have been lost in just one month, with unemployment already likely to be at least 50% higher. 

The impact of coronavirus will be felt unevenly, and there is a risk that it will deepen existing social and regional inequalities. These job losses have disproportionately affected young people, women and the lowest paid. These groups are more likely to work in sectors that have shut down or reduced activity, such as hospitality and retail. They are also less likely to be able to work from home.

The impact also varies significantly across the country: 18% of jobs in Greater Manchester are in ‘shut down’ sectors compared to 15% in the East Midlands. Likewise, 36% of jobs in the North East are in the most at risk occupations, compared to 32% in London, reflecting differences in occupational structure and ability to work from home.

The Government’s policy response has focused on: supporting businesses through grants, loans and other measures; helping people to stay in work, including by covering wages up to 80% of £2,500 per month per employee; and increasing the generosity of benefits. However, there is further to go and more we can learn from other countries. This includes the case for the ability to furlough workers part-time and increasing the generosity of benefits.

The future is highly uncertain, but there are five big challenges that policy must address:

  1. Support young people. We must avoid a ‘pandemic generation’ of young people with poorer education and skills prospects.
  2. Utilise people’s skills. We should match those out of work or furloughed to jobs growth areas such as supermarkets, as well as chances to volunteer.
  3. Prevent long-term unemployment. We must help those who lose their jobs back to work as quickly as possible, given the harm long-term unemployment does.
  4. Prepare for withdrawal of support. Emergency support should be in place for as long as needed, but we need to think about how best to withdraw it when safe to do so.
  5. Plan for the future. We need to think about how to combine high employment with improved security for people after the crisis.

Click HERE to read the full article from the Learning and Work Institute, April 2020.