In the aftermath of COVID-19, job losses are inevitable, however, looking beyond unemployment figures, this crisis will likely result in permanent, insidious change in the labour market.
The ONS1 presented unemployment at 4% during the first quarter of 2020, later hitting 5.1% in the fourth quarter. Given we have been in a flux of lockdown and reopening since March, one would expect unemployment to be significantly higher.
Furlough has offset job losses otherwise expected in a laissez-faire labour market.
Unsaid Digital takes a look at the changes implemented by businesses due to COVID-19 and how the pandemic affected employment rates.
Bursting a bubble of fragility
This unparalleled support may simply be delaying the inevitable for some firms and worrying trends are unlikely to be reversed post-COVID.
Industries teetering on the edge are pessimistic about business prospects, for some, the possibility of a heroic recovery appears unlikely.
In years preceding COVID-19, a net decline in physical stores emerged, as shown by PwC2.
As internet usage has grown, e-commerce has gained predominance. Firms have shifted practice alongside consumer trends, increasingly ceasing operations instore.
COVID-19 has simply accelerated these inevitable job losses; as unemployment increases, this only bolsters the worrying trend of technology displacing labour.
A prime example has been retail; firms who have not kept pace with their competitors and held a strong online presence have consequently lost out.
The ominous collapse of Arcadia and its subsequent dismantling represents the new norm of retail.
COVID-19 simply compounded Arcadia’s downfall, subsidiaries dallied in shifting resources to online retailing, causing sales to suffer beforehand.
Gradually, as Arcadia Group is sold off, online retailers such as ASOS have swept in. However, agreements have crucially excluded physical stores, leaving thousands of jobs in a precarious position.
ASOS have managed a shrewd deal, their premise of online remains, whilst managing to diversify operations which will only strengthen their market share.
A technological revolution
Beyond unemployment, the rise of the digital economy will result in a permanent change to our working practices.
Firms may adopt a radical change and wholly insist on remote working or incorporate this strategy alongside going in, such as hot-desking.
Remote working means fewer expenses for firms having to accommodate staff, as well as increased productivity according to Bloom.
However, this brings wide-reaching implications.
Firstly, working from home (WHF) will change the landscape around us. City centres will become quieter, as businesses abandon offices; firms, previously profiting from these spillover effects, will now suffer economically from reduced footfall.
Closure of physical stores means wider implications. It may result in an aberration from the traditional city centre, usually the cultural hub, and economically thriving, instead, streets will appear sombre.
Secondly, maintaining social engagement with colleagues has been a constant in our lives. Post pandemic, will reaching quasi-normality cause our mental health epidemic to remain?
It will be fascinating to see whether our mental health state can be directly attributed to the decline of the ‘workplace’ when a societal equilibrium is restored.
The future of jobs?
As a result of expected job losses, will unemployment rocket? Crucially, this depends on whether the government will adapt alongside structural change.
Akin to the economic restructuring in 1980’s Britain, COVID-19 may instigate a similar change this decade.
Firms have hastened this shift to online practice as they adapt to a new cultural norm. As we shift towards the digital economy, jobs will be created.
Alongside reskilling the unemployed, fundamentally, resources must be aligned with the knowledge economy. This may include greater efforts towards IT education, growing technological apprenticeship programmes, and subsidising R&D in the corporate sector.
If structural change is not implemented, there is a risk of long-run, structural unemployment and this digital skill gap will continue to widen.
Policy will play a critical role in aiding the economic recovery. Furlough has played a pivotal role in holding back a tide of job losses; how will the Government ensure a smooth transition away from the scheme?
Similar to the job retention bonus previously announced (and later abandoned), can the Government insure against protecting job losses post-furlough?
Since COVID-19, furlough has been the cornerstone of state intervention. It has provided employees security; however, it is worth considering whether it has simply delayed the inevitable.
Subsiding wages in declining industries has masked their inherent fragilities in order to signal a moderate level of stability to markets.
Afraid of an unemployment domino effect, Rishi Sunak, said:
“We know the premium businesses place on certainty, so it is right that we enable them to plan ahead regardless of the path the virus takes, which is why we’re providing certainty and clarity by extending this support.”
Are we solely relying on the state?
Despite discussing a macroeconomic issue, we can still support these jobs by shopping instore and supporting local businesses.
Some free-market advocates will argue these instore retailers must change with the times and abandon physical stores. Further, TNC’s have exploited their strong financial status to undercut local businesses fairly.
However, independent stores act as the fabric of many communities and helps to strengthen the local economy. We can also be assured of their environmental footprint, great customer service, and character.
For every case of redundancy, there are livelihoods at stake. Job losses will affect the infrastructure of our society, a young generation borne from a culture of precarious contracts are suffering the greatest.
As lockdown continues, we risk our habits becoming engrained and seeing little daylight in our weekly shopping spree.
However, moving forward, we can implement pragmatic change in the hope of restoring a thriving local economy.