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While few jobs were lost to Covid, a closer look is less encouraging


Plans are being rekindled and bookings made in the diary. From the high street, the shops, pubs and restaurants of Britain may remain largely in darkness, but preparations are accelerating behind the scenes for the easing of lockdown.

After more than a quarter of the year with no customers coming through their doors, non-essential shops and hospitality venues in England are starting to bring back workers from furlough and hiring new staff in the run-up to 12 April.

With employers buoyed by progress with the Covid vaccine and anticipating a boom in pent-up demand from lockdown-weary consumers, a picture of strength is emerging for the UK jobs market.

A generation ago an improving outlook would have been counted by the job adverts in the classified pages of the local newspaper. But in today’s digital labour market, platforms such as Instagram and Facebook and search engines such as Adzuna or Indeed are better ready reckoners.

Things are indeed looking up. According to figures tracked by the Office for National Statistics, online job adverts had risen to 96% of their pre-pandemic average on Adzuna by the last week of March, the strongest performance since the crisis struck a year ago.

Unemployment fell in the three months to January, according to the latest official figures, before the government’s roadmap for easing restrictions was announced in what is hoped to be a curtain raiser of better things to come. At 5%, representing 1.7 million people, the jobless tally in Britain is above the rate in Germany but below the US, France, Spain and other comparable big economies.

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So far Britain has defied the gloomiest forecasts with help from billions of pounds in emergency government support for jobs and businesses. UK unemployment is up to 2 million lower than feared last summer when the independent Office for Budget Responsibility predicted an early end to furlough would have sent the jobless rate to almost 12%.

To put the UK’s performance in context, history shows that the average rise in the unemployment rate for each of the past three major recessions was about 4.5 percentage points. The worst was in the 1980s when it more than doubled from about 5.3% in 1979 to a peak of 11.9% in 1984.

In the most recent episode, after the 2008 financial crisis the jobless rate peaked at 8.4% in 2011, about 3.2 percentage points higher than before the collapse of Lehman Brothers and the run on Northern Rock.

On the current trajectory, and if kept anywhere near current levels, the big story of the Covid crash will be just how few jobs were lost relative to the worst recession in 300 years.

However, look under the bonnet and there are reasons to be cautious about calling the green shoots of recovery too soon. Much of the positive news comes as almost 5 million workers remained on furlough at the end of February. Add this into the mix and the picture looks far less robust.

While there are hopes for a consumer spending boom from £180bn in additional savings accumulated by mainly wealthier households, the prospects for work will continue to be influenced by the path of the pandemic. Another wave in infections would derail the spending drive. Firms will also need to assess whether the rise in spending is maintained later this year after the initial post-lockdown rush fades.

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For these reasons, concerns remain that unemployment will march steadily higher later this year. With furlough due to be made less generous from July, and closed from September – before the economy is expected to be back at full strength – research published on Monday by the New Economics Foundation estimates that 850,000 jobs will be at risk of redundancy, reduced hours or lower pay.

The OBR expects unemployment will reach 6.5% after the scheme closes, representing about 2.2 million people.

Questions are also growing about the types of job available as the crisis recedes. Amid increasing demands that Britain “build back better” from the rubble of Covid, the early signs from online jobs websites aren’t too encouraging.

At the foothills of the labour market recovery, analysis from Adzuna shows rapid growth in postings for jobs where no formal qualifications are necessary. Changes in the economy caused by the pandemic are also casting a long shadow.

Without workers returning to city centres, especially in London, jobs in shops, hospitality and leisure dependent on them will fade to a trickle. According to Indeed, the share of jobs mentioning remote work has quadrupled in the past year, from 3% to 12%. While more than half are temporarily away from the office – suggesting a gradual return will come – most analysts expect a lower number of staff to make a permanent return to the daily commute.

This isn’t the say there won’t be opportunities in this new, atomised economy. Job adverts on Indeed show a rise in higher-paid positions dependent on the online boom such as in social media, software development and digital marketing. But the numbers are relatively small.

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Instead, the move to a home-working white-collar economy will drive up the more precarious blue-collar employment in Britain that was already becoming a worryingly significant feature of the economy before the pandemic hit.

With more people working from home and with shops still closed, postings for transport and logistics roles have risen to 181% of normal levels. Demand for warehouse picker jobs has more than doubled, while there have been similar increases in postings for other logistics jobs and for delivery drivers.

All of this suggests a two-tier economy could be starting to take shape between the more affluent home workers and those in lower-paying roles built around the new system.

Faced with these divergent trends, the government could play a pivotal role, ensuring workers in warehousing and distribution are not subject to the worst practices of employers who rely more on zero-hours contracts and low-pay.

Meanwhile the government’s long-awaited employment bill – which would enshrine greater worker protections – remains absent. With the risks to unemployment still lurking beneath the headline figures and the rise in lower-paid work, far more action is necessary.



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