- Job loss is the most severe immediate impact of Covid-19 crisis
- Chartered Institute of Personnel and Development (CIPD) and Adecco Group, in a survey of 2,000 companies stated that one out of three businesses in the United Kingdom intends to lay off staff after the furlough scheme expires in October 2020
- The Business Impact of Coronavirus (COVID-19) Survey (BICS) survey revelated that 54 per cent of business respondents reported a fall in turnover as compared to what is expected for this period of the year
As governments all around the world were seeking to save lives by slowing down the spread of the coronavirus, they have taken dramatic measures, with significant implications for economic activity. The British government declaring a lockdown to control the Covid-19 pandemic has definitely helped rein in the public-health crisis, however, it has also taken a toll on the economy.
The sudden emergence of the COVID-19 pandemic is dealing a severe blow to economies, businesses and workers. The unprecedented challenges are having economic ripple effects across the country as thousands of Britons unexpectedly find themselves out of work with a potential for significant increases in unemployment.
A rise in unemployment has been the most severe immediate impact of Covid-19 crisis, as a result of a drastic fall in the overall economic output of the nation. On 23 March 2020, the British government declared a state of emergency due to the coronavirus pandemic. Consequently, most of the industries had to suspend their business operations. They were also grappling with a severe drop in the consumer demand. Global and national supply chains got disrupted and this affected the revenues across businesses, thereby leading to job cuts and an increase in job losses.
According to a survey conducted by Chartered Institute of Personnel and Development (CIPD) and Adecco Group, a recruitment company, of 2,000 companies, one out of three businesses (33 per cent) in the United Kingdom intends to remove their employees during Q3 2020 (October to December), as the support from the government in the form of Job Retention Scheme is going to be pulled back by the end of October 2020. The issue is especially intense in case of privately owned businesses, with approximately 40 per cent of them expected to make job cuts.
The CIPD's Senior Labour Market Advisor, Gerwyn Davies, has commented that till now, the number of redundancies had been contained largely because of the Job Retention Scheme. But, the number of redundancies is estimated to increase this autumn, particularly in the private segment, when the plan comes to an end.
Impact of Covid-19 on Businesses
As per the Business Impact of Coronavirus (COVID-19) Survey (BICS) undertaken by the Office for National Statistics (for the period 13 July to 26 July 2020) as on 4 August 2020, out of 24,464 businesses sampled, 19 per cent of them had responded. The survey indicates that 90 per cent of the businesses have been operating for more than the last two weeks, 3 per cent have resumed their operations within the last two weeks after a pause in trading, 1 per cent of them are of the intention to resume their trading in the next two weeks, and 4 per cent of them do not wish to restart their operations in the next two weeks.
Out of the businesses which are currently carrying out their operations, 6 per cent of the total workforce has returned to the workplace from furlough in the last two weeks, and 4 per cent have moved from remote working to the normal workplace. Out of businesses currently trading or intending to restart in the next two weeks, 4 per cent of the workforce is expected to return from furlough, and 4 per cent are expected to return from remote working in the next two weeks.
Based on the BICS, followed data has also been collected regarding the financial performance of businesses currently trading:
(Source: Office for National Statistics – Business Impact of Coronavirus Survey)
The above chart indicates that out of the total businesses surveyed, 54 per cent have witnessed a decrease in their turnover as compared to what is expected for this period of the year (turnover has decreased by more than 50 per cent for 12 per cent respondents, decrease in turnover up to 20 per cent for 22 per cent respondents, and decrease in turnover by 20-50 per cent for 20 per cent respondents).
Job Losses to take place across sectors
According to the SMMT (Society of Motor Manufacturers and Traders), the UK's automotive sector could witness job cuts by more than 16 per cent due to the economic impact of the novel coronavirus.
Aston Martin Lagonda Global Holdings PLC, the UK car making company, has planned around 500 redundancies in June 2020.
Britain's largest automotive firm Jaguar Land Rover, popularly known as JLR is likely to axe nearly thousand non-critical roles in the United Kingdom due to the economic impact of the novel coronavirus.
Popular food outlets, Caffè Ritazza and Upper Crust, owned by SSP Group Plc recently announced plans to reduce its representative base in the United Kingdom by more than 50 per cent due to the economic impact of the coronavirus crisis, which has led to a dramatic fall in the number of travellers. These food outlets are based at airports and railway stations.
BP PLC is likely to axe 15 per cent of its workforce around the world. The Group is likely to cut nearly 2 thousand jobs in the United Kingdom.
Economic activity is seen to recover as lockdown restrictions are lifted, but the speed and patterns are highly uncertain and will vary across sectors. A rapid fall in output has impacted employment levels. The government is taking action to address the employment concerns facing Britons and to protect those who are no longer able to work. Some immediate issues on the minds of policymakers include expanding paid leave for workers, furlough scheme, and helping select businesses transition to working from home.