Unemployment could reach 14.8% if the UK suffers a second wave of coronavirus, according to projections by the Organisation for Economic Co-operation and Development (OECD).
Detailed analysis of 35 developed economies predicts that the UK unemployment rate – 3.9% in Q1 2020 – will soar to 11.7% in Q3 even without a second Covid-19 outbreak. Only Spain (22%), the US (13.5%) and France (12.4%) will fare worse. The average unemployment rate forecast for Q3 across the OECD is 10.4%.
The impact of coronavirus
The Paris-based organisation said the Covid-19 pandemic is causing a global jobs crisis far worse than the financial crisis of 2007-08. Women, young people and workers on low incomes are being hit hardest,
The OECD unemployment rate fell slightly to 8.4% in May 2020, after an unprecedented increase of 3.0 percentage points in April, to 8.5%, the highest rate in a decade.
Before the Covid-19 outbreak became a pandemic, it was at 5.2%. The OECD said the lack of variation between April and May resulted from contrasting trends. In the US, as the economy had started to re-open, many furloughed workers went back to work, but unemployment is “increasing or risks becoming entrenched” in many other countries.
OECD secretary-general Angel Gurría said: “Building on the swift and decisive initial response to the Covid-19 crisis, countries now need to do everything they can to avoid this jobs crisis turning into a full-blown social crisis.
“Macroeconomic policies must remain supportive through the crisis to minimise the risk of a prolonged slump and a lost generation of young people whose labour market prospects are durably harmed. Meanwhile, reconstructing a better and more resilient labour market is an essential investment in the future of the next generations.”
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The OECD Employment Outlook 2020 report describes some of the critical decisions that countries will have to make: at what speed to manage a return to economic and social activity, while keeping workers safe; how to scale back job retention schemes at the right time; and how to adapt support for self-employed workers and small businesses as economic activity picks up. It also outlines decisions on how to provide a comprehensive support package to the cohort of young people whose education or early labour market experience has been affected by the crisis.
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