Coronavirus: five years of employment growth reversed in one month

Liverpool St
A near-deserted Liverpool Street Station, City of London, during the coronavirus crisis.
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Despite the measures implemented by the government to protect jobs, unemployment is set to rise further and faster than during any recession on record, a new analysis has found.

Independent policy, research and development body the Learning and Work Institute cited figures showing there were over 400,000 Universal Credit claims in a week at the end of March, a figure more than seven times higher than the year before.

The number of claims was nearly five times higher than the peak in claims for Jobseekers Allowance – the main unemployment benefit at the time – during the height of the great recession in 2009.

The institute’s analysis suggested that the gains of five years of jobs growth – during which employment increased to a record high – had been reversed in just one month. The most recent ONS figures on employment were in January and showed a record 76.5% in work.

Most of the more recent figures used by the institute have been gleaned from other sources including Google searches, which it said could “give an early indication of emerging challenges before they show up in benefit claims or official data”. Researchers also looked at survey results and studies from the CIPD, YouGov, academic studies, ONS and British Chamber of Commerce.

The report’s authors calculated that unemployment had already increased from 3.9% to 6%, and said it was likely to go higher still.

Among the report’s conclusions, researchers said that the coronavirus crisis risked widening social inequalities, with young people, women, and those with lower levels of qualifications all at greater risk. It stated that:

    • workers aged under 30 were over twice as likely to work in a “shut down” sector than those aged 30 or more
    • 20.3% of women worked in a “shut down” sector, compared with 14.7% of men
    • Workers with no qualifications were over twice as likely to work in a shut down sector than those with a degree-level qualification.

The increase in unemployment would probably have been much larger without the government’s emergency measures to support businesses and protect jobs, most significantly the Coronavirus Job Retention Scheme.

The institute called for a significant additional investment in employment support to prevent a rise in long-term unemployment.

Co-author Joe Dromey, deputy director of research and development at Learning and Work Institute, emphasised how the public health emergency would be “ felt unevenly”, with coronavirus is likely to reinforce existing regional and social inequalities.”

Fellow co-author Stephen Evans, chief executive of Learning and Work Institute, added: “We need to act now to avoid a ‘pandemic generation’ of young people with poorer education and employment prospects, utilise people’s skills for a volunteer army, and help everyone who loses their job get back to work as quickly as possible.

“Following swift action to support people and businesses at the start of the crisis, it’s time to start planning now for how to return to work and invest in people’s futures.”

The report reinforced the point made by the Centre for Cities thinktank earlier this week that the economic pain inflicted by Covid-19 would be felt unequally across the UK. It stated that compared with the UK as a whole, the North East and the North West of England had higher proportions of employment in shut down sectors – which have had to significantly reduce operating in recent weeks to slow the spread of the virus.

These regions also, claimed the Institute, had the highest proportion of employment in the occupations most affected by coronavirus; 36% of people in the North East and North West work in the occupations most impacted by the lockdown, although London is not far behind, with 32%. London, however, also had a higher proportion of people in more elevated socioeconomic groups and who were able to work from home, the report found.

The regions which faced the highest risk of job losses as a result of coronavirus, according to the report, had lower levels of employment before the crisis. This implied that the impact of the crisis risked widening regional inequalities, and frustrating the government’s efforts to “level up” prosperity across the UK.

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