Second wave of coronavirus and no-deal Brexit threaten UK employment prospects

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​The unemployment rate may reach 9% by the end of the year, according to thinktank EY Item Club, an increase from 3.9% in the month to May.

Its summer forecast predicted the UK’s GDP will fall by 1.5% in 2020, a downgrade from the 8% it forecasted in June.

Data on travel patterns, shopping, heading back to work and visiting hospitality venues show the public is not willing to return back to ‘normality,’ the report said, with worries about contracting the virus as the most important factors shaping behaviour.

Sectors where social distancing can be more easily managed, such as construction and manufacturing, are recovering faster than service sectors reliant on person-to-person contact.

Arts and entertainment were poorly performing sectors in May, as other industries showed signs of improvement.

A second wave of the virus breaking out and the UK likely to leave the European Union with ‘no deal’ will all add pressure to the economy, impacting employment prospects.

Speaking to HR magazine, Matthew Jeffrey, EY UK&I recruitment director, said government measures will hopefully soften unemployment levels.

“Many businesses will likely have hit pause on recruitment as they wait for the dust to settle and they can better understand their hiring position.

“The strong focus on jobs in the chancellor’s Summer Statement should offer some critical near-term support for businesses. Apprenticeship funding, traineeship and work coaching could help mitigate some of the pressures facing young talent and provide the impetus to hire at this level.

"Meanwhile the new Coronavirus Job Bonus Scheme may provide an incentive for businesses to bring employees back from furlough. Further measures could be announced in the Autumn Budget.

Despite the impact coronavirus has had on the economy, Jeffrey added it was an opportunity for HR to move businesses forward.

He added: “COVID-19 could provide an opportunity for businesses to reimagine job roles and recruitment processes, with recruitment and HR teams incorporating positive lessons from remote working and virtual platforms into future hiring practices.”

During lockdown, unemployment rose and employers made over nine million workers furloughed under the Coronavirus Job Retention Scheme (CJRS), with another 2.5 million self-employed people receiving income support.

From August, employers will be asked to start sharing the cost of the scheme before it winds down at the end of October.

Mark Gregory, EY’s UK chief economist, said there is no choice between controlling the virus and saving the economy - the two are linked.

“It seems unlikely that the economy can return to its full potential until the virus has been eliminated or a vaccine has been developed, or a mitigating treatment has been shown to significantly reduce the risk from contracting COVID-19.

"In a consumer-centric economy like the UK, reluctant consumers will limit the level of economic activity even with a shift to activity online.”

Further reading:

UK employment law after Brexit

Chancellor details plans to end furlough scheme

Experts warn chancellor’s Job Retention Bonus is a “drop in the ocean” when dealing with furlough

Availability of temporary staff reaches record high

Redundancy tops employee concerns as lockdown eases

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