At Wednesday’s press briefing, Rishi Sunak levelled with the nation about the “significant impact” Coronavirus would have “on our economy”, warning that he cannot save every single job, business and charity in the UK.
In many ways, this was confirming what people already know, but the question that follows is how bad the impact will be.
There have been incredibly bleak predictions for the future, including forecasts that a depression is coming. Kenneth Rogoff, Professor of Economics at Harvard, goes so far to suggest that “the 2008 global financial crisis increasingly looks like a mere dry run”. More optimistic analyses say that the “rollercoaster” conditions of the Coronavirus crisis means it will be a short-lived recession.
Members of the public will naturally want to know what this means to them – in essence, how does it bear on the UK’s unemployment figure (which currently stands at 1.3 million)?
Even in spite of the Government’s generous package, if we are to return to anything like the 2008 crisis, we could see 2.5 million out of work (2010’s data). If it is worse than that, it could be closer to 1993’s figure of three million, or the mid-80s when it was 3.2 million. Given that 11 million have already stopped working, there are even suggestions it could go even higher.
The situation that the UK has arrived at is unpredictable for many reasons, not least because this is a recession quite unlike any the world has known before, and so arriving at any conclusions about what happens next is almost impossible. But should the most depressing forecasts be right, people’s minds will be cast back to one of the worst recent eras for unemployment; the early to mid-1980s, during which joblessness led to huge societal fractures and psychological scars.
Though unemployment was caused by different variables – pre-existing economic conditions, and the Thatcher’s Government early decision to raise some taxes and cut the rate of growth in Government spending – there could be similarities with the Coronavirus crisis.
For starters, it will be people of poorer socio-economic backgrounds tied up in precarious, practical jobs who suffer most as a result of both fall-outs. During Thatcher’s era, the manufacturing heartlands of the North, Scotland and Wales were badly impacted, and nowadays we see those in industries such as retail, events and food having their jobs halted by the Coronavirus.
One changing variable in 2020 is gender, with women hit harder financially by the Coronavirus than men, as they are inordinately likely to work in retail and hospitality
There’s also a generational imbalance in individuals affected, with under 25s two-and-a-half times more likely to work in a sector that has been closed.
It’s difficult to know how this group will adjust to mass unemployment, having never lived through the 1980s, and been children in another recessions.
One article suggests that because many young people and lower earners live with parents or other household members, the burden of unemployment be easier to bear, but I expect this generation will feel understandably fed up with the deal they’ve been handed – with even more protests that their future has been stolen (and not because of Brexit this time).
A question on the Government’s mind, as economic conditions get worse, might be whether the riots that formed the 80s, and indeed 2011, could be repeated again, the former of which were so bad that Thatcher considered arming the police – but stopped short of using the Army.
There is the obvious confounding variable that the Coronavirus blocks a certain amount of civil disobedience, as people are reluctant to leave their homes. Even before lockdown, as a Londoner, I saw people voluntarily self-isolating. Until the virus is gone, one suspects it unlikely we will see big numbers venturing out.
There is also the fact that some hostility will be directed outside of Britain, unlike it was in the 1980s, towards the Chinese Government, which many will be wary of because of this crisis. One suspects this wariness will, in time, be reflected in the way people vote, with expressions of protectionist sentiment increasing.
On a domestic basis, we might see protests against the Government mostly online, where video chat tools, such as Zoom, have already been used by Rebecca Long-Bailey to rally Labour support. It is difficult to know what the limits of these are, however, in terms of their effects – and how much support they will gather. Perhaps the web will be used for mass protests across the world – where joblessness rates are likely to be mirrored.
On the topic of the internet, unemployment will look particularly different in 2020, with a new dividing line being between those whose jobs are online-based, and those whose employment goes when premises close. The web could even become an extension of class wars, given that wealthy industries such as finance, law and accounting can survive better than small shops and businesses around the UK. Some freelancers may, conversely, have an advantage, perhaps for the first time, having been working from home for years.
Leaving on a positive note, the general interconnectedness of our planet could reduce the severity of unemployment. With everyone’s energies directed onto the web, the optimist might hope that the Coronavirus can accelerate a digital renaissance – building new jobs and future-proofing our society. The realist in me, a graduate of 2010, says this is going to be extremely tough.
Whatever the future, it seems to me that the exit strategy for the UK has to take into account the patterns we are likely to see from unemployment, with practical jobs prioritised for the first “release”, if you will, back into the world, and those who can work from home put last. It is the very least we can do in the short-term.