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The impact of Coronavirus on the job market

CMS Vocational Training Hadyn Luke posted this on Saturday 11th of April 2020 Hadyn Luke 11/04/2020

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The impact of Coronavirus on the job market

There’s no doubt that Coronavirus has already had a significant impact on the labour market, with potential for dramatic changes over the coming weeks, months and even years.

Almost one million people have applied for Universal Credit since the crisis began and there is concern that workers who have been furloughed will find themselves out of work when their employers either close down or cut their staffing levels later in the year.

So how does the world of work look now, compared with what was projected, and what should HR professionals be aware of as we move into uncharted waters?

The labour market before Covid-19 – and what has changed

On 17 February 2020, the Chartered Institute of Personnel and Development (CIPD) released its quarterly Labour Market Outlook.

As stated on the organisation’s website, the CIPD champions “better work and working lives by setting professional standards for HR and people development, as well as driving positive change in the world of work”.

The Labour Market Outlook for Winter 2019-2020 looked at employment indicators in the UK, based on market data and employers’ plans on pay, recruitment and redundancy.

The findings included the following:

Labour demand

Only a slight overall decrease in demand was predicted in the report and the areas that were considered particularly strong included healthcare (+28), construction (+27) and the voluntary sector (+23). However, Coronavirus has dramatically affected labour demand in all three of these sectors.

The need to recruit healthcare professionals, from frontline staff in hospitals to care home workers, has risen since the start of the pandemic and care homes in particular are struggling to fill their vacancies.

As the World Health Organisation (WHO) says on its website: “Health workers are at the front line of the COVID-19 outbreak response and as such are exposed to hazards that put them at risk of infection.” WHO has created specific guidelines for health care workers, which can be read in the organisation’s Guidance for Health Workers.

As the construction sector is one where most employees are unable to work from home, the government has produced Site Operating Procedures to minimise the risk to site workers. Build UK, the leading representative organisation for the construction industry in the UK has more information on its site: https://builduk.org/coronavirus/

Charities and others in the voluntary sector have been hard hit by Coronavirus, from having to close charity shops to seeing a downturn in donations as people’s incomes are hit. There are, however, specific measures to support charities, in particular those that are helping the public through lockdown, and the government has published guidance for those running charities during the current crisis: https://www.gov.uk/guidance/coronavirus-covid-19-guidance-for-the-charity-sector

Recruitment difficulties

In the last CIPD report, around two-thirds of employers looking to fill vacancies were saying that some job roles were proving hard to fill.

However, since the outbreak of Coronavirus, many employers will have halted recruitment – and indeed will have looked instead to reduce their workforce.

The roles that were proving most difficult to fill prior to the outbreak included professional occupations, associate professional and technical occupations, and roles for managers, directors and senior officials. Only a small number of employers were finding it hard to fill lower-skilled roles.

Whether vacancies remain available and whether these roles are filled will depend on how resilient companies are, how much government support they receive and when they are permitted to return to previous trading activities.

Inhibitors to wage growth

The main inhibitors to wage growth were cited in the report as:

Affordability: 30%

Public sector pay restraint: 26%

Absorbing labour costs (eg National Living Wage): 21%

While it’s hard to predict what wage growth will now be as the UK gradually returns to some kind of normal working life, with the enormous pressures on employers to deal with lost income over the past weeks and adapt to new processes and procedures to keep their staff safe, it’s unlikely that there will be many industries offering large wage increases in the coming months and even years.

Pay expectations

The report suggested a planned median basic pay increase of 2% for the 12 months to December 2020, with a slightly higher expectation in the private sector compared with the public sector.

However, Coronavirus has seen many companies asking employees to take a wage cut during the crisis to ensure that their business can continue to operate. How this pans out over the rest of the year will depend on how businesses are able to deal with the challenges of operating in these extraordinary times and whether further lockdowns are found to be necessary. It’s not likely that many firms will be in a position to offer pay increases, even in the best-case scenarios.

Conclusion

While the CIPD Labour Market Outlook reports is there to provide a useful insight into the world of work, the global pandemic has affected every industry at some level. Although some sectors may prove more resilient than others and a few may even profit from their goods and services being more in demand, there is a very high possibility of a global recession on the horizon.

Employers and HR professionals can find more information about how to respond to the COVID-19 threat on the CIPD website: https://www.cipd.co.uk/knowledge/fundamentals/emp-law/health-safety/coronavirus-factsheet

However, as the situation is changing daily, it’s important to keep checking for updates from the CIPD, the government, the NHS and the WHO on a regular basis.

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