Elena Magrini

Local labour markets have been affected in different ways by Coronavirus, calling for locally tailored recovery policies around employment and skills

The last three weeks  have been rich in publications revealing how the economic shock created by Coronavirus is affecting different local labour market. On June 11th, the Government released data on the take-up of the Coronavirus Job Retention Scheme and the Self-employment Income Support Scheme, while on June 16th  the Office for National Statistics published the latest unemployment claimant counts.  

These give us a much clearer picture of what is happening in our cities and largest towns across the country, providing an initial framework for what is needed to respond to this crisis and support people back into the labour market. It can also help us understand whether initial announcements from the Government and the plans it will unveil next week to restart the economy and create jobs will be adequate given the scale of the challenge – supporting every place to bounce back.

Firstly, we know that unemployment is rising and it is rising fast. Between March and May 2020, an additional 1.6 million people have filed a claim for unemployment benefits, be it in the form of Universal Credit or Job Seeker’s Allowance.

While these numbers might include some people still in work, the scale of the challenge is pretty much unprecedented. As of the middle of May there were approximately 2.8 million people claiming unemployment benefits across the country – approximately 6.4 per cent of the working age population. In places like Blackpool, Hull and Birmingham the claimant count rate is approaching 10 per cent.

This means that any policy response the Government is thinking of must be also unprecedently generous. This is no time for austerity, and adequate support must be given to the millions out of work, in the form of increased funding for Job Centre Plus or investment in skills for example, with particular attention to those places with high levels of unemployment claims.

Secondly, what the data also reveals is that the Job Retention Scheme is being successful at preventing even more people from losing their jobs. Approximately 8.9 million workers have been put on the scheme for at last three weeks since its launch and places with a larger take-up of the scheme are also seeing bigger increases in unemployment claims, suggesting the Job Retention Scheme is avoiding even more extreme rises in unemployment in the places hardest hit.

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Take Crawley for example: one in three workers in the town have been on the furlough scheme for at least three weeks since March. It is also one of the places which has seen the largest increases in unemployment claims – up by approximately 4 percentage points since March.

This turns the attention to the moment in which the Job Retention Scheme will be phased out. To avoid a second spike in unemployment, the Government must carefully think about how best to taper its support to businesses, giving particular attention to those businesses that play a central role in the functioning of the economy. In addition to that, the phase out of this business support must coincide with a “phased in” support for those workers that will be made redundant, for example in the form of grants to upskill and retrain.

Lastly, what the data also shows is that no place has been left unaffected, but different local labour markets are being hit to different degrees and at different pace. In the first month since the lockdown, cities and large towns with weaker economies in the North and Midlands – places like Blackpool, Liverpool and Hull – saw the largest increases in unemployment claims. From April to May instead, it was places like Crawley, Luton, Slough and London that saw the biggest rises.

This suggests that the recovery will also likely occur at different speeds in different places, meaning locally tailored solutions will be more important than ever. Measures to support people to be work-ready, such as investment in skills and career advice will be important up and down the country. But to make sure every people will be able to find a good job; these interventions must be coupled up with efforts to create new jobs in those parts of the country that are currently economically weaker.

Cities and large towns across the country do not just need to bounce back from this crisis, the economic shock created by Coronavirus must also be the opportunity to address regional inequalities. And there’s no better way to do it than investing in our people via employment and skills support.

Elena Magrini, Senior Analyst, Centre for Cities

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