COVID impact on employment may be milder than feared

1 December 2021

The UK government invested heavily to protect private sector employment during the COVID-19 pandemic, using schemes such as CJRS (aka “furlough”).

So far, this approach appears to have been successful in achieving the broad aims – there was a brief “spike” in redundancies in 2020, but no corresponding major increase in unemployment.

The winding-up of CJRS over July to September 2021 does not appear to have triggered fresh redundancies, as some feared.

In fact, with economic recovery now well-established, the number of unfilled job vacancies is very high and lack of workers is challenging business performance in many areas, including food and drink.

Research from the Institute of Fiscal Studies (IFS) suggests that most of those made redundant due to COVID appear to have been able to have find new employment quite quickly, if desired.

Some older workers transitioned from “employed” to “inactive” status however, which may indicate early retirement or some other life change, triggered by COVID.

Younger adults have seen broad migration between industries and roles. This redistribution is not seen in older workers – older people may be less flexible.

The major exception to this generally positive picture is the London region, where employment remains badly affected by COVID-19, according to IFS.

This may be because many of those employed in the capital in the pre-COID period, worked in roles connected to tourism and commuting (eg: entertainment, foodservice). Until demand in the capital is restored, then labour demand will likely remain depressed.

Wage growth in the private sector remains quite strong, perhaps because both employers and workers recognise that workers hold considerable bargaining power.

Researchers in both the USA and the UK have identified a phenomenon called “The Great Resignation”, triggered by increasing shortages of labour which embolden workers to switch jobs or to demand better conditions in their existing roles.

Data from You Gov suggests that about 49% of adults in the UK now perceive that work is easy to find, compared with 9% at the height of the COVID lockdown. The major exception to this is the very youngest adults.

 

An error has occurred. Unhandled error loading module.