The UK Labour Market: Where are we now?

The impact of Covid-19 on the UK labour market

In April 2020, 1.6 billion people globally faced the immediate prospect of having their livelihood destroyed.

A great deal of uncertainty surrounds the long term impacts that COVID-19 will have on the UK labour market.  Unsurprisingly there has been a drop in the number of job vacancies available, with many firms putting recruitment on hold for up to 6 months.  Industries such as travel, leisure and oil and gas have seen seeing savage cuts to their operations and many jobs losses.  Conversely, industries such as health and care, online retailers and tech firms have seen a surge in recruitment. 

What does the UK labour market look like?

  • Unemployment is at 5.1% – the highest for 5 years
  • 2.6 million additional people are currently claiming out of work benefit 
  • In February 2021 there were 726,000 fewer people on payrolls than at the same time the previous year 
  • Of those 726,000 – 425,000 were aged between 18-24 years old 
  • 6 million people are estimated to currently be on furlough
  • 1 in every 16 people are currently employed, have changed their job and industry as a result of the pandemic. 
  • Between Nov 2020 –Jan 2021 there were 559, 000 job vacancies advertised this is 211,000 fewer than over the same period of Nov 2019 – Jan 2020

What is the impact on young people?

  • Previous evidence shows that, whilst recession increases unemployment across the population, it is those leaving education who see the most severe impact 
  • Understanding the damage of unemployment during a recession is viewed as complex but main issues are health, wellbeing and earnings 
  • This year there was an expectation that approximately 800,000 young people would be approaching the labour market for the first time 
  • If we look at data from 2008/9, unemployment generally across the working age population was 8.5% whereas for those leaving full-time education it was 32% 
  • Data also suggests that those leaving education in 2008/9 where much more severely affected by the crisis than those who left after 2011 
  • It’s not just school leavers who are affected.  The impact us also felt by graduates, who are more likely to take ‘lower skilled jobs’ as supposed to ‘no job’.
  • What are the chances of getting actually getting a job in a recession? 
    • Graduates – 15% lower 
    • Level 3 – 27% lower 
    • Level 2 37% lower 

This equates to some young people seeing their likelihood of finding work reduced by more than a third.

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