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16 July 2020

Until Covid-19 is tamed, the UK’s jobs crisis will endure

The issue holding back the creation of new jobs, both outside and within city centres, is fear of the virus. 

By Stephen Bush

The latest employment data from the Office of National Statistics shows a weakening labour market, with all the signs pointing towards sharply rising unemployment when the furlough scheme ends in October. 

But perhaps the most alarming trend of all is the very low level of job vacancies, which are their lowest level since the ONS began measuring these statistics back in 2001. 

When the economy is functioning normally, jobs are lost and created all the time. To use a current example: jobs are lost in bars, cafes and restaurants in city centres – but all things being equal they ought to be replaced by new jobs servicing the interests and habits of the same people in their homes, whether through deliveries or through local cafes, bars and restaurants. The former is happening – the latter isn’t. 

What’s the cause of the problem? The government believes that the major problem is the number of people who are working from home during the pandemic, which is why they are stepping up their exhortations for people to return to working in offices.  

The reality is that a greater level of homeworking is here to stay. Large numbers of businesses want to shrink or entirely abandon their central offices, with greater numbers of people working from home. Even assuming that the latest positive news about the development of a vaccine does bear fruit, the accelerated trend towards more homeworking is not going to fully reverse.

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The nightmare scenario over the long term is that the homeworking economy results in a higher level of unemployment than one in which we all commute to work. The more likely scenario, in my view, is that the issue holding back the creation of fresh jobs, both outside and within city centres, is fear of the virus – and that any measure which stops the virus in its tracks will save jobs, and with it, our cities.

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