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'The shape of the workforce to come?'

Professor Chris Warhurst

Warwick Institute for Employment Research

01 June, 2020

The immediate future of work in the UK looks grim. Even before the health crisis is over, a new front has opened in the battle with the coronavirus – jobs. Unemployment is due to rise steeply and persist into the medium term. If the UK Government has been on the back foot recently, it can, however, use the experience of the health crisis to get on to the front with the looming jobs crisis. It might even use the opportunity to reboot its Industrial Strategy.

Whilst the world was still casting a wary eye on the clever robots that were said to be coming to take all our jobs, something more insidious, and beyond the control of humans, crept in and really has led to millions of workers losing their jobs worldwide: the coronavirus. In the UK, official statistics this week reveal a slight increase in unemployment, with the rate up to 3.9% of the working population or 1.35m people.

However this data only covers the period to the end of March and so the first week of the lockdown. The prediction is that it will have risen more steeply since March and might hit 10% by the end of the year. It might possibly fall back to around 6% for most if not all of next year, indicating a ‘U’ rather than ‘V’ shaped recession.

Even the next set of quarterly data due out over the summer is likely to reveal the hidden unemployment amongst some currently furloughed staff. Some businesses that furloughed their staff will not survive the lockdown.

Some others that do survive will only be able to resume trading slowly and with reduced capacity – those in the hospitality sector most obviously. Almost 90% of workers in this sector are currently furloughed. If the job retention scheme is removed too early these businesses will shed staff and create further unemployment.

If the new data on unemployment reveals too little, there are other indicators of the shape of things to come. One is the rate of benefit claims. Data from the Office for National Statistics (ONS) that includes April shows a large and steep rise in the percentage of people making benefits claims in that month. The number rose by around 850,000 to 2.1m people, a rise of 69%.

The other indicator is the dramatic fall in the number of vacancies. Again, movement has been steep and immediate, this time downward, see below. Compared to previous quarterly data there has been a drop of 170,000 or over 20% in job vacancies.

The labour market data is bad news for workers but also for the UK Government. The Government’s Industrial Strategy, focused primarily on high-valued added, innovative sectors such Aerospace, Artificial Intelligence and Life sciences, was bedding in. Just before the health crisis hit, the UK recorded yet another record high in employment – 76.6% of the working population.

Moreover, through its Good Work Plan, the UK Government had turned its attention to job quality, not just job creation, and was promising decent pay and prospects for all. With the looming jobs crisis, these sunny uplands now seem a long way off.

The future of work however is not written and will not be determined solely by the coronavirus. Within the constraints, there are choices about how the UK Government can manage the jobs crisis.

The Government should look to what’s been happening in the economy and labour market during the health crisis as pointers to future needs. Indeed, as the lockdown eases and ministerial minds turn to the new battle for jobs, there is an opportunity for government to think strategically about the workforce of the future.

Over the next year or two the coronavirus looks set to significantly impact the number of people in work and change where people work. Providing reactive support to those thrown out of work by the crisis will be necessary.

But the UK Government also needs to be proactive. It needs to get ahead of the curve and start to think strategically now about the future shape and size of the workforce in light of the health crisis. If it’s smart, and in consultation with employers and unions, the Government might even use the opportunity to reboot its Industrial Strategy.

Based on the experience of the past two months, the following 7-point plan is offered as to what the UK Government should do now in preparation for the medium and longer-term:

1. Identify and nurture key workers who provide essential services used by us all during the crisis

However the Government, IFF, TUC and ONS have all produced different lists of these key workers. A definitive list needs to be created so that these workers can be nurtured, meaning their number stabilised and their employment made attractive to enable recruitment and retention. This list needs to be jobs-based, i.e. focused on occupations within the different sectors.

2. Develop key products security through UK manufacture

The UK Government needs to identify key products, not just key workers. The health crisis revealed the fragility of the UK’s dependency on overseas supplies and even living room production of vital goods such as PPE. The March of the Makers stalled but should be revisited. Where production has been offshored it should be encouraged to be restored; where gaps in domestic production exist, UK start-ups should be encouraged. The aim has to be to provide the UK with key products security.

3. Appreciate and support priority sectors

As we now know, the sectors supported by UK Government’s current Industrial Strategy are important but not sufficient. Other, more mundane sectors such as food and drink manufacture and retail, transport, chemicals and social care are vital for everyday functioning and are the foundation of the economy. The Government also needs to support these sectors, distinguishing them as priority sectors.

4. Fill any vacuum in voluntary social services

The shape and size of the public sector employment may have to change. Many charities, particularly those that protect vulnerable people, back-fill the gaps in social services left by the withdrawal of the state in recent decades. With many charities losing significant donation income and facing collapse, the Government will need to either bail them out or (re)absorb these vital services.

5. Appreciate the public sector and its workforce

Many workers in the public sector not only provided vital public service during the crisis but laid themselves open to the virus. They were the frontline. The list includes doctors, nurses, porters and cleaners in hospitals, teachers in schools and soldiers at Covid test centres. They deserve respect and reward, including decent pay and adequate staffing levels. As a mark of its renewed appreciation, the Government might encourage more universities to mainstream public sector management courses.

6. Recognise the new utility

The health crisis has revealed that the economy really has changed in some respects – the main one being its reliance on the new delivery and logistics services provided by platform companies such as Amazon. These services should now be classified as one of the key utilities along with water, gas, electricity and ITC. There needs to be a public debate about the ownership and control of, and quality of employment within, this new utility

7. Reinforce the good work message

Almost every crisis leading to high unemployment has led to calls for job creation at the expense of job quality. But we now know that job quantity and job quality are not only compatible but also mutually beneficial. Countries can have high levels of employment and good quality jobs, and that good quality jobs make more productive and innovative businesses. As a route to recovery and growth, the UK Government has to maintain and reinforce its commitment to good work.

These measures might all feature in rebooted Industrial Strategy 2.0. They will help protect and secure jobs and sectors vital to UK wellbeing and help prevent a collapse in UK employment levels.

Professor Chris Warhurst is Director of Warwick Employment Group and Academic Lead on Warwick’s new Global Research Priority on Productivity and the Futures of Work.