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.”
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.