Britain’s jobs market is suffering levels of inactivity never seen before, the Bank of England’s chief economist has warned, as a record number of firms plan to lay off workers.
Andy Haldane, a member of the Bank’s Monetary Policy Committee, said Covid is widening the “pretty hefty” gap between rich and poor as lower-paid workers bear the brunt of the economic crisis.
His warning came as a new survey revealed a sixth of businesses are preparing to cut jobs in the coming months.
The labour market has seen a “rapid rise” in workers being made unemployed or furloughed with inactivity climbing to levels the UK has not “possibly seen ever”, Mr Haldane said at a CogX 2020 online event.
“We also know the costs of that are being felt quite unevenly across society. Those most likely to have their incomes cut and perhaps even their jobs cut are lower paid people, lower skilled people, women and of course the young,” he said.
Mr Haldane added the crisis had exposed a disconnect between the pay of certain workers and their value to society, questioning whether GDP measures could capture their importance.
A record share of businesses expect to lay off workers as the scale of Britain’s looming unemployment crisis becomes clear, recruiters have warned.
More than a sixth of firms are preparing to slash staff numbers in the coming three months, according to headhunter Manpower, while just one in 20 expects to expand its workforce.
This ratio is the worst in the history of the employment outlook survey, which began in 1992.
A few industries are planning to increase headcount. The public sector is hiring to handle the increased burden of public administration and care work, and agriculture is scrambling to replace 90,000 temporary farm labourers who in previous years typically came from abroad. However, the vast majority are cutting back.
Almost three-quarters of transport and communications firms said at least half of their business has been suspended due to the lockdown.