Summary

• The job market is reeling due to the economic crisis brought in by the coronavirus pandemic.
• According to the latest data from the ONS, 730,000 jobs have been lost since the lockdown shut business activities.
• The wages over the three months to June 2020 fell for the first time since 2001.

The coronavirus pandemic has severely hit the job market as both businesses and self-employed activities came to a complete standstill. Apart from the woes of job losses, raise in pay cuts has affected the motivation of people to continue with their roles, significantly adding to the unemployment numbers. Pay cuts have also impacted the living standards of the citizens and brought changes to their expenditure behaviour. Since the UK government-imposed lockdown and businesses stopped working (except for some essential services), the economy has recorded a steep climb in the unemployment numbers. The total count stands at 730,000 job losses that include the young, the elderly, and the self-employed citizens.

Key points from the latest ONS data on job losses

The latest data from the Office for National Statistics (ONS) mentioned that in July 2020, the UK recorded a total of 81,000 job cuts and brought the employed numbers to just below 28.3 million. Highlighting the age component of people losing their jobs, the ONS on 11 August 2020, mentioned that during the April-June quarter there was a massive fall in the number of employees above the age of 65 who were earlier on company’s payrolls. At the other end, workers below the age groups of 24 were also hit hard. Stressing on the issue of pay cuts, the ONS observed that the wages over the three months to June 2020 plummeted for the first time since 2001. It is to be noted that recording of the wage numbers began in 2001. The drop in wages has led to a fall in people’s living standards, even before considering the inflation figures.

The coronavirus pandemic-led lockdown asked people to stay at their homes and follow the social distancing norms. This reduced the demand for various self-employed services and businesses, especially in the second quarter of 2020. The number of people claiming unemployment benefits also ascended. Between March and July 2020, there were 2.7 million people who worked for fewer hours or earned lesser incomes. The data from the ONS showed that the number of hours worked dropped to record lows both on the year and on the quarter basis.

As the UK’s unemployment numbers do not consider people who out of work and not looking for a job at present, and those on the government’s furlough scheme, in the second quarter, the country’s unemployment rate did not see much difference. It is interesting to note that the unemployment numbers were recorded at 3.9 per cent for Q2 2020.

Also read: Government Urged To Support People Left Out Of The Furlough Scheme

There is a rising fear that the government’s present determination to end the furlough scheme in October 2020 will see additional job cuts by several companies. It has been witnessed that some of the bigger companies like the British Airways and BP plc (formerly The British Petroleum Company plc and BP Amoco plc) have cut more than 100,000 jobs. Several companies in the retail and hospitality sector, which are traditionally known to be people-intensive industries, are struggling for survival amid the ongoing fight against the coronavirus induced crisis.

Also read: Covid Impact: Aviation Industry Workers Undergoing Massive Job Losses

Also read: Covid-19 Impact: Job Redundancies Continue to Rise in High Street Retail

The ONS emphasised that the coronavirus pandemic has pushed the UK into a slump situation, not seen in the last hundred years. The overall fall in the employment numbers for the quarter was the biggest since the slowdown brought by the financial crisis of 2008. The ONS felt that the Brexit is further drowning the UK’s problems at economic front. There is little time left before the end of 2020 with the authorities to clinch a deal with the European Union (EU), Britain’s biggest trading partner. Even if the deal comes through, businesses in the UK would have to take some tough decisions to reduce costs and build new systems to generate profits. Adoption of such strategies across various industries is likely to have impacts on jobs. The country’s export segment is expected to remain staggered in times to come as Britain will lose out on the benefits of the trade deals that the EU had with other countries. The government is yet to bring in similar trade deals that would boost manufacturing and generate employment.

Road to recovery for the job market

The road to recovery for the job market looks difficult in the near future. Despite the various schemes announced by the government to support industries across the sectors and other steps to protect jobs, companies would keep continuing to cut jobs as part of their route to generate profits and other cost-cutting measures. Many companies would invest in technology to part with non-essential roles, become leaner and concentrate more towards creating demands for their products and services.

Also read: Job losses Continue Unabated at Major British Companies

Also read: Does The Risk of Job Losses At TSB Highlight the Importance Of Technology For Banking Sector?

In a recent announcement, the Chartered Institute of Personnel and Development (CIPD), the professional body for experts in people at work, mentioned that around a third of employers expect to cut jobs in the next three months. The CIPD data is an outcome of surveying 600 companies and suggests that across all sectors, companies are planning to make an average 5.5 per cent of their workforce redundant. This average is an increase from the 3.6 per cent average cut that businesses considered about three months ago. In the public sector, there would be a loss of 36 per cent of staff, informed the CIPD.

Given the fear of job losses, the CIPD's net employment index was in a positive zone with plus two, a decrease from plus five three months back. This index is a measure of the number of companies planning to recruit new staff against the number planning to lay off employees. The private sector’s intentions in terms of hiring at plus nineteen are much better than the public sector’s negative thirty-five. Regarding this gap between the private and public sector, several industry experts mentioned that it remains to be seen if the private sector could quickly generate new jobs in adequate numbers to improve the job market scenario.

Also read: Employers Turn Bullish on Jobs and Investment in the UK

Conclusion

Lower spending means lower demand for goods and services, ultimately derailing the entire economy’s recovery process from the unprecedented crisis brought by the pandemic. Even as the economy has started to open up gradually, the government’s guidelines on maintaining social distancing norms, a recent spike in Covid-19 cases, travel restrictions, quarantine norms, among other factors have deterred people from coming out of homes and engaging in profitable economic activities. The imposition of the lockdown has accelerated the use of technology to perform several tasks, leading the businesses to cut roles of the non-essential workforce to contain cost. Given the various measures by the government to support jobs, the panic-stricken businesses need to maintain a balance between employing relevant technology to compete in the market as well as retain and recruit manpower to contribute towards their strategic growth objectives.