Two million people lose their jobs in record plunge

Linda J. Dodson

Up to 2m workers have lost their jobs already in the coronavirus crisis in the biggest blow to British employment on record.

It means Covid-19 has wiped out the past five years of employment growth in a matter of weeks.

The Institute for Employment Studies said the loss of between 1.5m and 2m jobs comes on top of those workers who have been furloughed by bosses who would have let them go but are using the Government’s aid scheme to keep them on the payroll.

It is more than twice as big a crunch as the financial crisis, in which employment fell by a peak of 740,000, and amounts to about 5pc of those in work.

Nothing like this has been seen since the official data series began tracking the labour market in 1971. Such a hit will take the unemployment rate up from 3.9pc – a 45-year low – to 7.5pc, close to the peak rate in the financial crisis.

It will take years for employment to get back to its recent peak of almost 33m people.

“It is highly unlikely that we will see a steep recovery in employment or unemployment in the near future, and we expect that it will take years rather than months for the labour market to fully recover,” said the IES.

The young are most at risk as well as women who often work in the retail and leisure sectors, which are “particularly vulnerable” industries.

The longer they are out of work, the harder it becomes to find another job and to get their careers back on track.

“These ‘scarring’ effects are likely to be particularly pronounced in this recession, as the nature of the lockdown means that those who become unemployed now will find it harder and take longer to get a new job,” said the IES.

It proposes a large-scale programme to help those newly out of work, hiring recruitment agencies and other private sector firms to aid Job Centres and their vastly increased workload.

“This support will need investment. However this will likely pay for itself in fiscal terms, and will far outweigh the potential economic and social consequences of inaction,” said the IES.

Wage subsidies could help get people back into work, as could major retraining schemes to make sure the unemployed maintain vital skills.

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