Will lead to unprecedented unemployment shock and widening economic inequalities
New analysis by Learning and Work Institute shows that the coronavirus crisis will cause an unprecedented increase in unemployment which risks exacerbating pre-existing economic inequalities.
The report warns that despite the measures put in place by government to protect jobs, unemployment is set to rise further and faster than during any recession on record. There were over 400,000 Universal Credit claims in a week at the end of March, a figure over 7 times higher than the year before. The number of claims is 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.
Learning and Work Institute’s analysis suggests that the gains of five years of jobs growth – during which employment increased to a record high – have been reversed in just one month. The analysis finds that unemployment has already increased by half – from 3.9% to 6%, and that is likely to go higher still.
The economic pain inflicted by coronavirus will be felt unequally across the UK. Compared to the UK as a whole, the North East and the North West of England both have a higher proportion of employment in ‘shutdown sectors’ – which have had to significantly reduce operating in recent weeks to slow the spread of the virus. These regions also have the highest proportion of employment in the occupations most impacted by coronavirus; 36% of people in the North East and North West work in the occupations most impacted by the lockdown, compared to just 32% in London. London is split, with a higher proportion of people in ‘shutdown sectors’ but also a higher proportion of people in higher socioeconomic groups and able to work from home.
The regions which face the highest risk of job losses as a result of coronavirus had lower levels of employment before the crisis. This suggests that the impact of the crisis risks widening regional inequalities, and frustrating the government’s efforts to ‘level up’ prosperity across the UK.
In addition to the uneven regional impact, the coronavirus crisis risks widening social inequalities. Learning and Work Institute analysis shows that young people, women, and those with lower levels of qualifications are all at greater risk:
The report finds that the increase in unemployment could have been even larger without the government’s unprecedented emergency measures to support businesses and protect jobs, including the Coronavirus Job Retention Scheme. It calls on government to set out an ambitious strategy to get Britain back to work once the worst of the pandemic is over and when it is safe to ease the lockdown – backed by a significant additional investment in employment support – in order to prevent a rise in long-term unemployment.
Joe Dromey, deputy director of research and development at Learning and Work Institute, said:
“The coronavirus crisis is first and foremost a public health emergency, but it will also have a severe economic impact.
“Despite the welcome measures the government has set out to protect employment, we are on course to see the sharpest increase in unemployment ever. This impact will be felt unevenly, and coronavirus is likely to reinforce existing regional and social inequalities.”
Stephen Evans, chief executive of Learning and Work Institute, said:
“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.”