The UK is heading for levels of mass unemployment that could rival that seen in the early 1980s, the Bank of England’s chief economist has warned.
Speaking to the Sunday Telegraph, Andy Haldane said around half the UK’s 33 million workers had either already lost their jobs, were working shorter hours or had been furloughed as a result of the coronavirus.
Furlough and job losses
He warned that the UK could see unemployment reach levels seen in the early 1980s recession, when unemployment peaked at over three million.
He said: “We’re going back to that, basically…Those fears are going to be cast over a much wider cohort of the workforce, maybe as much as half of them. We need to find a way of reabsorbing all of that labour as quickly as possible in good jobs.
“When I was a teenager at school I could see the impact that joblessness was having on my friends’ families. As many households are facing that now as there were back in the eighties and that is why this scourge of unemployment – and it was a scourge back then – we need to get rid of that as quickly as possible.”
His warning came as the Resolution Foundation revealed a third of lower-paid employees had lost their jobs or been furloughed as a result of the pandemic, compared with less than one in 10 top earners.
Its survey of 6,005 adults found 15% had been furloughed from their main job in early May, rising to 21% in the private sector. Around 3% of employees and 4% of self-employed people had lost their main job.
Those who had jobs with variable hours or zero-hours contracts before the pandemic were the hardest hit: 31% of employees with variable hours and 28% on zero-hours contracts had either lost their main job or been furloughed, while 19% of those previously on temporary contracts had lost their main job.
“Britain’s lowest-paid workers and those with the most insecure work are bearing the brunt of Britain’s economic crisis,” said Resolution Foundation economist Hannah Slaughter.
“Thankfully, the majority are having their earnings protected by the government’s retention scheme. Nonetheless, their job prospects over the coming months are highly uncertain.
“The government’s bold support measures have avoided unimaginable unemployment rises but the jobs crisis is far from over, with around one in seven workers still fearing they could lose their jobs in the coming months. We now need to see new measures – including job guarantees for young people – to tackle the high levels of joblessness that are likely to be with us long after the pandemic has subsided.”
Chancellor Rishi Sunak last week claimed that around 7.5 million people had been furloughed by about one million organisations.