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Time to take stock of what has happened to jobs and workers during the first phase of the pandemic

Elena Magrini, Senior Analyst, Centre for Cities

Where has been hardest hit economically by the first lockdown? 

Combining data from the use of the furlough scheme, unemployment related claims and job postings reveals which places are entering this second phase of the pandemic in a weaker position

Last week was supposed to mark the end of the Government’s flagship policy to protect jobs during the pandemic – the Coronavirus Job Retention Scheme.

Many things have changed in the labour market since its introduction back in March, and with a new lockdown just announced for the coming month, this is a good time to take stock of what has happened to jobs and workers during the first phase of the pandemic.

We have done so using the three most timely indicators we currently have about local labour markets:

  1. Furlough data
  2. Claimant count
  3. Job postings

This is what we found:

1. Furlough data

While many places have relied heavily on the furlough scheme during the first lockdown, some have reduced its use more quickly than others.

Overall, over 9.6 million workers in the UK – approximately one in three – have benefited from the Coronavirus Job Retention Scheme for at least a three-week period since the beginning of March.

Spatially, there has been great variation in the popularity of the scheme. On one hand of the spectrum, over 40 per cent of eligible workers in Crawley have used the scheme for some time since March. Similarly, more than 35 per cent did in Burnley and Birmingham. In contrast, only one in four working residents in Cambridge, Peterborough and Reading have used the scheme at any point over the past six months.

On top of that, there has been great variation in how places have been phasing out the use of the scheme. As of the end of August, Stoke and Sunderland for example had half the take up rate on the furlough scheme than Slough and Birmingham, despite all these places having the same level of overall use of the scheme, meaning that recovery can require a different pace even when similar levels of jobs have been affected.

2. Claimant count

Unemployment claims are high not just in weaker economies, but in some otherwise successful cities too.

While official statistics lag a few months behind, the claimant count data, which looks at the number of people claiming benefits for the primary reason of being unemployed, can give us an initial indication of which places are being hit hardest.

The most striking finding this measure reveals is that it is not just the typical suspects, but some otherwise successful cities too that are seeing concerningly large increases in the number of people claiming unemployment related benefits.

As of mid-September, Birmingham, Hull and Blackpool were the three cities with the highest claimant count rate, but Slough and Luton were also in the top 10, despite having below average claimant count rates back in March.

3. Job postings

Job postings are struggling to recover everywhere, but especially in places where working from home is more popular and high-street footfall lags behind.

Looking at the other side of the coin – the availability of new job opportunities – helps us understand how easy it is (or not) for people currently unemployed to find a job.

Given the circumstances, it is not surprising that job postings are overall down by 46 per cent compared to this time last year. But what it is most striking is that job postings, particularly in local services businesses such as cafes, restaurants and shops, are particularly low in places where more people are able to work from home and the high street is struggling more to recover.

London is close to the extreme on these measures: overall job postings in the capital are down by 52 per cent compared to last year, and job postings in local services businesses are down by 57 per cent.

Whose labour markets have been hit hardest?

Combining the findings from the three measures reveals the places whose labour markets have been hit hardest since March.

London and Manchester, are in the top 20 for all three indicators, but hardest hit are three towns whose economy is heavily reliant on airports and international travel:

  1. Crawley
  2. Luton, and
  3. Slough

In contrast, suggesting they were among the least economically affected by the pandemic so far, among the bottom 20 places on all indicators, there are only three cities:

  1. Preston
  2. Barnsley, and
  3. Swansea

As we brace ourselves for a winter of renewed restrictions, it will be increasingly hard to find a job, particularly in some places.

The extension of the Job Retention Scheme for November and the consequent introduction of the Job Support Scheme will help those still attached to their employer through the months ahead, but it is unlikely enough jobs will be created for all those that have already been made redundant if restrictions continue to be in place.

In the short term, this means the Government needs to look into ways to give more support to people already unemployed, while setting out a plan for job creation to be implemented as soon as infection rates decline.

Elena Magrini, Senior Analyst, Centre for Cities

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