The coronavirus outbreak has turned the UK labour market on its head. Just a few months ago employment continued a buoyant rise to 76% in spite of sluggish economic growth and extraordinary levels of political uncertainty. Despite pressing challenges around low pay and poor security, this record level was an impressive feat. This has been rapidly altered by the pandemic, with emergency lockdown measures grinding everyday life to a halt, likely reversing years of employment growth in the process.

Employment crisis already towers over the darkest days of Great Recession

Last week’s labour market stats release sheds light on this sudden reversal of fortunes. The usual lags with typical labour market measures (ILO unemployment) mean we are still waiting to see the true scale of the crisis. Until then, other useful indicators suffice – and they tell a troubling story. In May, the number of people claiming unemployment benefits increased at the fastest rate on record to 7.8%. That’s an increase 1.6 million people receiving either Job Seeker’s Allowance or Universal credit while looking for work since March.

The rising number of unemployed matched with falling vacancies (vacancies fell 60% between February and May) delivered another truly astonishing statistic. For every vacancy in the UK there are now nine job-seekers – this compares to 1.7 per vacancy before the crisis, and four per vacancy at the peak of the Great Recession. Worryingly, this will likely rise as the crisis rolls on. L&W projects that unemployment will soon exceed four million – higher than any point since 1938.

An unparalleled package of support for workers and businesses

Without the extraordinary level of intervention by the government, unemployment would likely be much higher, dwarfing the worst of the Great Depression. Measures such as the Coronavirus Job Retention Scheme (CJRS) and Self-Employed Income Support Scheme – responses that would have been unthinkable through any previous crisis – are protecting the jobs of a substantial proportion of the workforce who may otherwise now be unemployed. An estimated nine million workers are currently furloughed as part of the CJRS.

Those that have been kept on a lifeline and shielded from the true magnitude of the crisis by the emergency support are now vulnerable to changes in this support. As lockdown begins to ease and some businesses reopen, many will be unable to bounce back to normal due to the damage inflicted over the last few months, social distancing restrictions, and the ongoing economic crisis. Those working in the sectors and occupations most affected, and those unable to balance their caring responsibilities with their work, face a second peak in unemployment as support provided through CJRS and other measures are withdrawn.

Just like the health crisis, which has seen death rates twice as high for those living in the most deprived areas, the economic crisis is disproportionately affecting those least able to withstand it. L&W analysis shows that unemployment has risen fastest in areas where it was already highest, and projects that the lowest-paid and low-skilled will be worst affected.

The government’s responses to the crisis must build back better

The crisis risks exacerbating the very inequalities that have rendered some most exposed to the economic and health emergency. Like the Great Recession before it, this crisis is likely to lead to higher levels of in-work poverty and job insecurity in the long-run, with a substantial risk of long-term scarring those that are already most disadvantaged.

As we move towards the next stage of the crisis, the government should rightly focus on tackling unemployment. However, the issue of good work – that was not long ago at the top of policy makers agenda – must not lose prominence. The race to tackle unemployment should not come at the expense of losing focus on the quality of work, the levels of income it provides, how it suits individual circumstances, and the scope for onward progression. We must also ensure that the principles of good work are applied to those still working, but in workplaces transformed by the crisis – including those working from home or in Covid secure workplaces.

The government must remain ambitious with an unrivalled package of support that brings together all relevant to this task (including local government, business & worker groups and the employment and skills sector) and holds no stops in protecting both individuals and employers. Through aligning its strategy for recovery with the need to secure better work for all, the government and other stakeholders can help to mitigate the employment crisis, while building back better – addressing many of the issues that have become increasingly familiar for many workers across the country.

Connor Stevens, research manager, Learning and Work Institute

Connor currently manages the Better Work Network. The network is currently leading a programme of research and development around the impact of the coronavirus crisis on low paid workers and the drive for good work. The includes a review of the impact of the crisis on London’s workers and a series of seminars examining what policy makers and practitioners can do to mitigate the crisis while delivering better work.