Pandemic has widened jobs and skills inequalities, putting ‘levelling up’ at risk

The coronavirus pandemic has worsened inequalities in work and incomes, hitting groups including young people, single parents, and people from BAME backgrounds hardest, according to a new report.


23 03 2021


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The research – published by leading employment and skills think tank Learning and Work Institute to mark the anniversary of the first lockdown – lays bare the unequal effects of the pandemic. Worryingly for the Government’s commitment to ‘levelling up’, the number of people claiming unemployment-related benefits has risen three times faster in areas with the highest pre-crisis unemployment than in lower-unemployment areas. Areas that have higher BAME populations have seen claimant rates rise more than three times faster than areas with lower BAME populations, and two times the national average.

One year on

The labour market impacts of coronavirus and priorities for the years ahead

Young people account for one half of the falls in employment, despite accounting for only 12% of total employment. Single parents and low paid workers are among those who have faced falls in their incomes and so face challenges to get by too. For example, single parents saw their working hours fall by 26%, more than other groups, and were more likely to say it was difficult to manage financially during the pandemic. They are more likely to be affected by the planned end to the £20 per week Universal Credit uplift in September.

Overall, unemployment is expected to be almost one million higher by late 2021 compared to before the pandemic. However, a further 2.5 million people could have lost their jobs without the furlough scheme preventing employment dropping in line with economic output. Nonetheless, long-term unemployment, particularly damaging to people’s future job and earnings prospects, is already up by 25% in the last year and likely to rise sharply during 2021.

With the successful rollout of the vaccine programme, the Government needs to focus on recovery from the impacts of the pandemic and building a better and more inclusive economy for the future, not simply a return to ‘business as usual’. This means fixing the structural economic weakness that pre-dates the pandemic, and harnessing shifts like the transition to net zero and increased remote working and online shopping.

The new research identifies five priorities for the Government as the economy reopens:

  1. Bring back furlough and other support if a resurgence in the virus means further restrictions are required.
  2. Introduce a Youth Guarantee of a job, apprenticeship or training offer for all young people. This should include the 500,000 16-18 year olds leaving full-time education in summer 2021, as well as those already out of work.
  3. Make the £20 per week Universal Credit uplift permanent. Ending this in September would mean cutting the incomes of the poorest 10% of households by 5%.
  4. Use expanded employment support, like new Work Coaches and the Restart scheme, to help those who were out of work before the pandemic, rather than cutting this back to save money if unemployment peaks lower than previously expected.
  5. Renew the focus on good work and progression, so people have jobs which give them security and opportunities to get on. That includes harnessing the potential of the transition to a net zero economy to create green jobs.
Stephen Evans, chief executive of Learning and Work Institute, said:
Unemployment has increased significantly during the pandemic despite support like the furlough scheme limiting the damage, with groups such as young people disproportionately affected. We need to avoid this damage affecting us for years to come. As the economy reopens, the Government should introduce a Youth Guarantee so all young people are in education or work, make the Universal Credit uplift permanent, and harness the potential of green growth. Our aim should be recovery from the pandemic and building the economy and society we want.