Press Release: UK faces ‘horrendous’ impact on jobs from Covid-19
The prospects for British workers are “horrendous” with more than half of employees in occupations most vulnerable to the coronavirus pandemic set to be furloughed or made redundant, according to new findings to be published by the National Institute of Economic and Social Research next week.
Unemployment will rise by around 5 million workers from 1.34 million to more than 6 million by the end of May to take the effective unemployment rate to around 20 per cent, more than five times its current rate of 3.9 per cent, according to two leading academic labour market experts.
Professor David Bell of the University of Stirling and Professor David Blanchflower of Dartmouth College (in the US) and a former member of the Bank of England’s Monetary Policy Committee point out that their figures assume that furloughed workers will count as unemployed. However, they point out that official statistics may describe them as employed but not working, which they describe as a “rather novel definition of employment”.
They say that some of these workers will be furloughed and may return to work if and when there is a recovery, but this will only happen if their companies are solvent and have a market to sell into. “This becomes a tougher call the longer the lockdown persists,” they write. “In short: unemployment is set to rise in the UK by a lot. What is coming in the labour market looks horrendous.”
The article, US and UK Labour Markets Before and During the Covid-19 Crash, which will be included in NIESR’s quarterly National Institute Economic Review to be published on 29 April, tracks the changes in the US and UK labour market that have occurred in the months and days from the beginning of March 2020 using what the authors call the Economics of Walking About (EWA).
They conclude that that shows a collapse 20 times faster and much deeper than the Great Recession of 2008/09. “This EWA evidence suggests that the US and UK labour markets are experiencing an unprecedented fall in demand that will have an immediate, negative effect on the experience of those already in the labour market, those seeking to join it, and their households,” they write.
Professors Bell and Blanchflower call for an improvement in the way that official labour market data are published in the UK. They point out the latest release from the Office for National Statistics published on 21 April only covered the three months to February before the Government implemented the lockdown on key areas of the economy.
Data for the crucial three months of March to May are not published until mid-July. “We should be tracking this on a daily basis, not six months after it has happened,” they conclude.
Notes for editors:
The research reflects the authors’ views and does not necessarily reflect the views of the institutions that they may represent.
The full copy of the paper can be accessed here. For queries for the authors please contact the NIESR Press Office: press [at] niesr.ac.uk / 07930 544631 / l.pieri [at] niesr.ac.uk
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