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Global Employability

Employment in the UK: After a Slump, Boom Expected

Following a dismal period for the job market in the UK, a phenomenal increase in employment opportunities is expected. These findings have been highlighted in a Chartered Institute of Personnel and Development (CIPD) and The Adecco Group report titled, the Labour Market Outlook. After conducting a survey of 2,000 employers, the report asserts that in the first quarter, the share of employers who are seeking to recruit would rise to 56 percent. Meanwhile, the survey also shows that the net employment intentions figure, which measures the difference between the proportion of employers intending to increase jobs and those planning to decrease them, “rose to +11 this quarter.” This increase is higher than the growth in previous quarters.

As unprecedented changes are now expected and the economic growth forecasts gain momentum, there is a need to access the job market in the UK. Moreover, reports need to be accessed in the context of the effect of the pandemic and the changing unemployment rates in the UK.

Pandemic and Unemployment in the UK

The pandemic has had a significant impact on the UK. According to official statistics, so far 140,062 people have died and 4,190,000 cases have been recorded across the country. To check the spread of the COVID-19 virus, lockdowns have been an effective means for governments throughout the world. However, lockdowns have curtailed economic activity, which has had a significant impact on economic growth. The UK has tacked the same problem. The first national lockdown in the UK was announced in March 2020, the second in November 2020, and the third in January 2021. Depending on the number of COVID-19 cases in different areas, varying levels of restrictions have been imposed in different parts of the country. The situation has become especially tense since December 2020, when a new COVIDvariantin London led to the second wave of the pandemic. These developments have affected the economic growth, consequently, the rate of employment in the country has remarkably fallen.

Currently, the unemployment rate in the UK is the highest in the last five years. According to the official reports of government’s Office for National Statistics, the unemployment rate rose to 5.1 percent in the last three months of 2020.  As BBC states, there were 726,000 fewer people on company payrolls compared to pre-COVID levels. The unemployment rate has consistently fallen through 2020, as from September to November 2020, the rate was estimated at 5 percent —1.2 percent points higher than 2019 and 0.6 percent higher than the last quarter. Moreover, the impact of unemployment has been particularly felt by the younger generation, as about three-fifths of those unemployed are younger than 25 years. The London labour market has been hit harder than the rest of the country. Studies point out that compared to 2019, there were around 200,000 lesser employees on London payrolls in 2020.

To combat the situation, the government has taken many steps. The furlough scheme is the most important among them. Under the scheme, those who had been working at restaurants, hotels, bars, retail outlets, and other similar businesses that have been shut because of the pandemic, would not lose their jobs. Instead, the staff would be furloughed, as these businesses would get a Coronavirus Job Retention Scheme grant from the government. Owing to the grant the employees would receive at least 80 percent of their salary. Consequently, such employees would not be counted as unemployed and would resume work when the businesses reopen. Estimates show that so far about 10 million workers and 1.2 million companies have benefited from the furlough scheme. Currently, the rate of those receiving the benefits of the scheme in the UK is 14.2 per thousand, hinting at the dismal situation and growing strain on the government. The situation however is expected to change in the second quarter of 2021 as the CIPD reports assets.

Positive reports and the road ahead

The CIPDsurvey has various aspects that need attention. Speaking to the BBC, Gerwyn Davies from the human resources organization hinted at the impact Brexit would have on the employment of UK citizens and residents. He stressed that unemployment, “May even undershoot official forecasts, especially given the reported fall in the supply of overseas workers.” The sectors that are expected to hire the most employees are healthcare, finance, insurance, education as well as information and communications technology. The hospitality sector is expected to take the most time to recover. The report states that in the hospitality sector about a third of the employees lost their jobs and only 36 percent of employers in the sector intend to recruit new staff. Given the long lockdowns, retail is another sector that would see a slow recovery.

Not surprisingly, the furlough scheme has been responsible for checking a steep rise in unemployment. Concerns about further extension of the scheme have been continuously raised especially since the recovery of some sectors is expected to be sluggish. The on-going lockdown will also be reopened in a phased manner, where lifting of all restrictions will take place only in the months of June-July. Meanwhile, the government has taken stock of the situation. According to recent reports Rishi Sunak, the current Chancellor of the Exchequer has decided to extend the furlough scheme. The latest grant is to run from February until April and the next from May to September, providing time for job generation and economic recovery. However, the extension comes with more caveats. Under the new scheme, the employers would have to pay 10 percent of their employees’ salaries in July, while the percentage would increase to 20 percent in August and September.

In sum, the pandemic and its effect on UK’s economy has undoubtedly painted a bleak picture for job seekers. The government policies are expected to provide a boost to the economy, however, for the job market 2021 would be a mixed bag — replete with opportunities as well as challenges.

Date added
04.03.2021

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Global Employability

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