Following March’s fall in payrolled employees, experts warn the true impact of COVID-19 on the UK workforce will not be evident for another six to twelve months*. Businesses are being urged yo invest in labour force planning and preparation.
With 56,0001 people in PAYE employment losing their jobs in March, there were more than 800,000 less payrolled employees in comparison to March 20202. Combined with the September finish dates of furlough and other Government support schemes, Renovo warns that this employment fall may trigger further, long-awaited labour market challenges that could impact workers and businesses.
Rhys Moon, Director at Renovo, explained: “These latest payrolled worker figures illustrate a slow but significant start to the changes we have been expecting in the labour market since the pandemic started.
“Currently, the market is a mixed picture. There’s a 16% increase in job vacancies3 thanks to the partial lifting of UK lockdowns, average earnings rose by 4.5% too4 after a significant fall at the start of the pandemic. In contrast, 2.7m people are now seeking benefits because they are “searching for work”, compared to 1.4m in March 20205.
Despite obvious adversities however, the current labour market is surprisingly robust, according to Renovo, with levels of restructure and redundancy lower than anticipated.
Moon explained: “We’ve found that it is taking people we support just two weeks more than before the pandemic to transition into new roles. Eighty two percent of individuals move on successfully within 90 days. However, it is difficult to define COVID’s exact long-term labour market impact, particularly as almost five million people are still on furlough, and many are on long-term furlough. Analysis from the NEF predicts that 850,000 more could become redundant, or have hours or pay reduced when the Government support scheme ends6.”
Renovo advises that as the support scheme is not scheduled to cease until September, the UK is likely to experience a relatively stable job market for the time being.
Moon summarised: “Employers should take this opportunity to evaluate their current labour situation in a careful manner, preparing for the latter part of 2021. Options for workforces include reskilling, redeploying, restructuring and reducing.
“While we are in the calm before a potential storm, businesses should take this time to be proactive, innovative and considered in their approach to their workforce’s future. Planning is sensible as it’s impossible to tell how large our economic injury is, until we rip off the Government’s furlough plaster.”
*Statistics according to Renovo