Numbers, Numbers, Numbers – The Outlook for Jobs in the Post-Covid Era

Businesses are doing the numbers and it isn’t looking good.
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Pick a number, any number, and the chances are it will be horrendous.

Since the start of the pandemic the number of jobs in the UK has declined rapidly, having gone from 650,000 down in June (with just under 70 per cent of those job losses recorded in April), to 730,000 down by the end of July compared with March 2020. The groups of people most affected are younger workers (24 and under) or older workers, and those in more routine or less skilled jobs.

Publication of the figures for August onwards is awaited nervously, as employers decide whether there is any point in continuing to support jobs that cost them more money each month as the government’s Job Retention (furlough) scheme winds down. The latest figures for furlough scheme (9 August 2020) indicate that 1.2 million employers have furloughed a total of 9.6 million employees. In addition, there were 2.7 million claims under the Self-Employment Income Support Scheme.

The latest Office for National Statistics’ Business Impact of Coronavirus Survey shows the North East has the highest proportion of businesses applying for any type of support (furlough scheme, loans, grants) at 88.4%, compared to the national average of 82.3%. North East businesses are also potentially storing up future challenges by deferring payments (business rates, VAT etc.) to a greater extent than average with 76.2% using this facility, compared to 63.4% nationally. However, it is some consolation that the region has been less reliant on the Government’s furlough scheme than most other parts of the UK.

By sector, take-up rates across the support schemes amongst employers are highest in Accommodation & Food Services (87%), Trade Union, Political, Religious & Repair (76%), Arts, Entertainment, Recreation & Other Services (75%) and construction (75%). The figure for the hospitality sector is likely to have changed following the introduction of the ‘Eat out to help out’ scheme from 1 August.

In respect of employments furloughed, take-up rates are highest in Accommodation & Food Services (73%), Arts, Entertainment, Recreation & Other Services (66%) and construction (59%). In other words, three quarters of all hospitality jobs and two thirds of cultural sector jobs have been furloughed (again acknowledging that ‘Eat Out to Help Out’ will have seen some hospitality jobs return, but some such staff may still be on the furlough scheme part-time).

By nation and region, furlough take-up rates are remarkably consistent for the most part, although the range from bottom (South East at 28.6%) to top (West Midlands at 31.8%) is more significant. Within each of the nations of the UK there are some substantial differences by local authority area, with the rate of employments furloughed in South Lakeland (Cumbria) being double the figure for Boston (Lincolnshire). In other parts of the UK the spread is much less marked. 

At 29.6% the North East is at the lower end of the spectrum. Nevertheless, this represents 329,500 employments having been furloughed. By local authority area, take-up rates range from 27% (in both Middlesbrough and Redcar & Cleveland) to 32% (in both Gateshead and Sunderland).

In respect of the number of jobs furloughed, take up rates are highest in the three employment size bands covering the 2-19 employees range, where the take up rate in each case is more than 50 per cent of employers. Although the take up rate is lowest amongst businesses employing 250 people or more, they account for more than one third of all employees furloughed.

Nevertheless, that leaves around 6 million jobs (administrative data from the HMRC PAYE system records jobs rather than people) in the nation’s small and medium sized enterprises currently being protected by a scheme that only has two more months to run. Unless those employers experienced a significant upturn in business in August, and crucially an upturn that they believe will be sustained, they will need to consider the consultations necessary to enable them to have some of those employees off their books as the furlough scheme runs out. Given the time and cost required for a small business (many of them without in-house HR expertise), the quick option is to let go employees with less than two years of service, who do not enjoy the employment protections of longer serving staff.

Businesses planning to make 20 or more staff redundant are obliged to notify the Government by filing an HR1 Advance Notice of Redundancy form. In June 2020, 1,778 businesses warned of intending to cut more than 139,000 jobs (England, Wales and Scotland). For the same month last year, the corresponding figures were 345 employers and 24,000 jobs. In other words, the number of jobs under threat increased by a factor of around five and a half. The Institute for Employment Studies (IES), expect the figures to be bigger in July and bigger again in August, based on the number of announced redundancies in each of those months that will feed through into the official figures in due course. Consequently, the IES believes it is inevitable that redundancy numbers will be higher than they were at the peak of the last recession.

A survey by the Chartered Institute of Personnel and Development (CIPD) and recruitment firm Adecco Group found one in three companies expect to make redundancies by the end of September, with hirers exceeding firers by the biggest number since this data was first collected in 2013. Redundancy activity is expected to be broad-based, with IT, manufacturing and construction sectors the most likely to be affected. Data provided by CV-Library revealed that the number of graduate jobs being advertised has fallen by 60.3 per cent year-on-year.

All of this is bad news, but there is more misery still beneath the surface. Jobs lost do not impact on the current postholder alone, but also on the people who might have succeeded them. Jobs lost amongst those who are financially vulnerable risks creating even wider divisions between rich and poor, and where they are concentrated in particular places that means affected communities risk drifting even further economically from more resilient parts of the country. Sadly, this has applied particularly to communities in the North-East over recent decades, and is predicted to continue to do so both as a result of the coronavirus impacts and the new international trading arrangements in the form currently looking likely from January 2021.

And at just the point at which the North East needs more security and more certainty with regard to jobs, along comes Brexit… 

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