Coronavirus and the labour market: Impacts and challenges


Coronavirus is a public health crisis, but it is also having a profound impact on our economy. In this report, we explore the early evidence of the impact on our labour market.

Despite unprecedented measures by government to protect businesses and jobs, the coronavirus crisis is set to lead to the sharpest spike in unemployment on record. There were one million claims for Universal Credit in the last two weeks of March, and the gains of five years of employment growth appear to have been reversed in just one month.

The impact of coronavirus will be felt unevenly. Young people, women and the lowest paid are more likely to work in sectors that have shut down or reduced activity. The North East and the North West have proportionately more jobs in high risk industries and occupations. With the prospect of higher job losses in areas which had lower employment rates before the crisis, there is a risk that it will only deepen pre-existing regional inequalities.

The future is highly uncertain, but there are five big challenges that policy must address:

  1. Support young people. We must avoid a ‘pandemic generation’ of young people with poorer education and skills prospects.
  2. Utilise people’s skills. We should match those out of work or furloughed to jobs growth areas such as supermarkets, as well as chances to volunteer.
  3. Prevent long-term unemployment. We must help those who lose their jobs back to work as quickly as possible, given the harm long-term unemployment does.
  4. Prepare for withdrawal of support. Emergency support should be in place for as long as needed, but we need to think about how best to withdraw it when safe to do so.
  5. Plan for the future. We need to think about how to combine high employment with improved security for people after the crisis.