The furloughed economy

This month’s labour market date from ONS shows that if official unemployment has remained at around 5% since the last quarter, the number of people on payroll has plunged by 693,000 since the start of the pandemic, with younger workers under the age of 25 accounting for 60% of the jobs lost since February 2020.  As a result, the unemployment rate for 18-24 years stands at over 13%.

Of particular significance has been the 15% fall in the number of students (locked out of campus) working since the start of the pandemic, but  unemployment  for 18–24-year-olds ‘not in full-time education’ has increased at twice the rate  compared to the population as a whole. Meanwhile, recruitment  has remained deeply depressed. The number of vacancies in the three months to February being 27% lower than a year earlier with the ONS saying growth in vacancies had slowed in the last three months. Job protection has taken precedence over job recruitment.

But of equal importance is the amount of people who are now back on some sort of  furlough.  Numbers  are lower than the 8.7 million last May, but at 4.9 million this represents  over 1 in 6  all those currently employed – the figure excludes grants and loans provided to the self-employed. In the hospitality sector where 30% of the workforce is under 25, the  figure approaches 60% , similar to that in arts and entertainment, while  in retail it is over 20%. It’s impossible to predict the increase in unemployment when these job support measures end, but according to some estimates there may be as many as  2 million zombie jobs’ – in businesses that have already ‘shut’ or intent to scale down their operations but, because of the furlough, are still able to pay their workforce. In all, 44% of businesses were furloughing at least some staff in January.

Those parts of the retail, entertainment and  hospitality sectors that do manage to survive may turn to automation more quickly than was previously likely. For example, the Financial Times recently estimated up to 250 000 jobs in hospitality could be lost this way. Machines do not fall ill, they do not need to isolate to protect peers and their customers, neither do they need to take time off work!

If younger and lower-paid workers are more likely to have lost their jobs or be furloughed,  those in professional, managerial, and administrative  occupations, have  continued to operate from home in ‘zoomie jobs’ with many reporting their working lives are better and that as a result of lockdown they’ve  significantly increased their levels of saving.  How much they spend and on what,  will also influence future employment levels in heavily furloughed sectors.

But if working from home (or at least for part of the week )becomes the new normal for millions, then in future there’s nothing to stop employers – who will already benefit from being able to economise on office space  – cutting costs still further by contracting work to cheaper areas. The size of the ‘core’ will not only fall, but bosses will seek to alter contracts of those who remain, increasing workloads (there’s already evidence that home workers are doing longer hours) flexibility and reducing levels of security.

While £billions has been paid out to people told not to work, Covid will wreak huge changes to ’employability’  in the economy of the future. New types of safety net and a much greater role for the state in the regulation of employment practices will be required in response to these large increases in precarity as well as large falls in the number of workers able to rely on trade unions to support them.

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