What's Next for the UK Labour Market?

Source: Emsi analysis of HMRC CJRS Statistics
Uncertainty ahead
With the scheme ending this month, there are fears that more redundancies may be on the way, with employers facing tough decisions in an operating
environment still heavily affected by COVID-19 restrictions. The next few months will be critical, with as many as 200,000 further redundancies potentially in
the pipeline. A recent OBR forecast supports this view, forecasting a peak in unemployment of between 9.7% and 13.2%. This wide gap reflects the many
variables influencing outcomes, from the as yet unknown potential for a second lockdown, to the introduction of a vaccine by next Summer and the
effectiveness of the Government’s recently introduced replacement Job Support Scheme.
Sector Outlook
The COVID crisis brought disruption to every sector. Construction was quickly affected but has begun to recover, with social distancing made easier by open air
working and a high proportion of self- employed workers. Manufacturing too, has shown signs of a faster recovery. As might be expected the hospitality, travel
and high street retail sectors have been among the hardest hit, with closures during shutdown and restrictions still in place on opening hours, plus the high labour
intensiveness of these occupations. In terms of geographical spread, those areas such as Central London, with a heavy concentration of consumer-facing
businesses suffered most, not least because of the reduction in commuting during lockdown. Areas dependent on tourism also took a heavy knock.
Who has been affected most?
In terms of gender, the effects of COVID-19 on employment are relatively evenly spread, although women are more likely to be working in the worst-affected
sectors. Younger people have been significantly affected. Nearly half the workers furloughed are under the age of 35. This age group are more likely to be
working in the worst affected sectors, which includes the sports industry where over 65% of workers are under the age of 34 and up to 75% of businesses have

The shoots of recovery
While the statistics offer a cautious note of hope, with sectors like healthcare,
food retailers and admin and support businesses hiring, there has been a 58%
reduction in vacancies nationwide with on average 3.7 people unemployed per
job vacancy. Our own experience at Blue Arrow has been a 44% uplift in
applications during March to June, with many jobseekers expanding their job
searches to geographical areas and industry sectors they have not previously
worked in. Care workers and teachers with DBS clearance for example have
transferred to the health sector permanently in some cases.

The new normal - long term changes may be
ahead
With many people embracing the idea of home-working, changes in workforce
patterns are predicted, with more flexible working patterns and a shift in office
use away from 9-5 working to a focus on central facilities for collaboration as
required. This in turn may lead to out of town relocation of places of work to be
nearer relevant talent pools.
At the same time, there has been a rise in demand for temporary labour, as
employers look to ‘borrow’ staff short-term and wait to hire new permanent
staff in the face of the ongoing uncertainty that is likely to prevail for some time
yet, although this pattern is highly variable across the sectors.
With the emphasis on health and wellbeing going forward, new business
opportunities may arise as the health and leisure sectors adapt to survive in the
new normal – for example the sports industry has the potential to expand
online and to work with corporate employers in developing programmes to
support the mental and physical health of their staff going forward.
Somewhat overlooked in the current crisis, BREXIT is also likely to play a role in
the employment market shifts, with a range of occupations currently facing
shortages across England, Scotland, Wales and Northern Ireland, according to a
recently published Migration Advisory Committee report.2

Navigating the future
The recovery, influenced by multiple factors is hard to predict, with continuing changes month on month, while the success of initiatives such as the Job Support
scheme has yet to be proven and specific Government support for struggling sectors as yet unclear.
From the point of view of HR specialists, this uncertainty also underlines the importance of the need for a deeper understanding and analysis of data to support
strategic workforce planning and decision-making.
The Government’s Plan for Jobs scheme announced in July this year pledged investment amounting to several billions to cover a package of measures to support
jobs in every part of the country, giving businesses the confidence to retain and hire, and provide people with the tools they need to get better jobs.
While this is welcome news, it is important that each sector and region gets the specific help they need. Employers need to use their voice through relevant
forums and bodies such as the REC to ensure that this helps covers workers of all ages, especially those exposed to attrition through automation, to find new