More than half of the jobs in some sectors of the UK economy are at risk if the lockdown continues for an extended period, a new study suggests.
Estimates produced by the Institute for Social and Economic Research (ISER) at the University of Essex suggest the lockdown threatens to temporarily take at least 6.5 million jobs out of the economy – around a fifth of the national total.
The institute’s modelling factors in the ability of employees to work from home, which means some sectors are less affected than others. It also estimates how the reduction in demand for goods and services is having an impact on jobs.
The researchers estimate that almost 2 million jobs in the wholesale and retail industry (48% of the total) and 1.3 million jobs in hotels, pubs, restaurants and cafes (75% of the total) have disappeared, with a further 1 million being lost in the service sector.
Modelling also suggests that 800,000 jobs in the non-compulsory educational sector have also gone, many of these in nurseries.
Professor Matteo Richiardi, an expert on modelling labour markets who carried out the study, warned that whether the jobs are lost for ever depends on the duration of the lockdown.
“If this is short, say a few months, the links between employers and employees of affected industries might not be severed, and individual careers might not suffer too much,” he said. “Under a longer lockdown, losses of human capital and scarring effects will occur. The economy will still bounce back, but at a higher cost for individuals.”
Richiardi said the analysis confirms that a continued lockdown is economically unsustainable, a position that will force the government to find a way to get the country working again.
“This is why we need to make the most out of the extra time the lockdown is buying us, and increase our capacity to trace and isolate new cases, especially asymptomatic cases, so that the economy can be restarted before a vaccine is ready.”
In the meantime, some sectors will need more help than others. “What our results show is that the extra support available will be drained more by workers coming from some sectors than others,” Richiardi said. “This, however, needs to be complemented with targeted industrial policy, by means of specific packages for badly hit sectors, such as retail and education.”
The threat to nurseries would be felt acutely across the economy, should they close permanently.
Neil Leitch, chief executive of the Early Years Alliance which represents nurseries and child minders, said the sector had faced significant financial challenges even before the emergence of Covid-19.
“The sector is struggling to stay afloat, and many providers have had to take the decision to furlough staff – workers who are frequently singled out by the Low Pay Commission as some of the lowest earners in the country,” he said.
“The early years sector has played a crucial role in supporting key workers to go to work during the coronavirus crisis, but without serious financial support from the government, workers could lose their jobs as many providers could be forced to close.”
Richiardi called for the lockdown to be phased out across sectors and regions, and phased in again if needed, rather than switched on and off altogether.
“In deciding which sectors should reopen first, epidemiological considerations should be given priority, exactly as epidemiological considerations led to the decisions to close down those sectors in the first place,” he said.
“Countries that initially put the economy first, like the US, are not performing very well in the crisis, while countries where strong, early action took place, such as Taiwan, are experiencing reduced economic effects.”
A time of unprecedented crisis, he suggested could be met by only one response: “When the free market is stopped, the state has to step in.”
