The last twelve months have brought with them a range of unexpected economic disruptions to the United Kingdom. As COVID-19 has spread through Europe the economy of the UK took a severe hit, shrinking by 19.5% in the month of April 2020. Our analysis suggests that labour market resilience will be a more reliable indicator of how the UK may respond to economic shocks in the future.
Prior to the pandemic, the UK’s labour market appeared to be strong, upheld by a combination of structural and cyclical factors. But a historically low unemployment rate hid a series of underlying weaknesses that have given rise to insecure employment outcomes, low productivity growth and new risks to labour market resilience. These weaknesses have been highlighted, and in many cases exacerbated, by COVID-19. In particular, job insecurity, regional disparities, higher levels of labour market polarisation, and declining vocational training are now holding the UK back. Further, a large number of low paying, low productivity service sector jobs in the UK will be particularly vulnerable to job loss when the UK’s Job Retention Scheme comes to an end in the summer of 2021. Policy makers must balance crisis management with longterm planning to build resilience across the UK.
For the full Whiteshield Global Labour Resilience Index, created with IFOW and Oxford Said Business School please see here.