With the number of vaccinated on the rise, more and more are looking forward to a post-Covid world – but the economic consequences of the last twelve months are forecast to linger long after the positive tests stop.
Many industries—particularly in the travel, hospitality, and leisure sectors, which have been hit hardest by a lockdown—are already struggling. The latest unemployment figures showed 693,000 payrolled jobs lost over the year of the pandemic, with the vast majority of the newly unemployed being young people.
Today’s 5 percent unemployment figure – equivalent to 1.7 million people out of work – was the highest in five years. And the Office for Budget Responsibility predicts that it will get worse: 2.2 million people are expected to be out of work by the end of 2021.
With the number of Universal Credit claimants doubling since the start of the pandemic and rates of rent arrears and food bank use already high, the growing redundancy crisis needs to be a political priority.
A Sudden Change
For those made redundant early in the pandemic, the shock was part of the devastation. Tom had been working with an international study abroad provider based in London for two years until he was laid off in March 2020.
‘It all happened really quickly,’ says Tom. ‘At this point, the government hadn’t actually announced that the furlough scheme was going to come in, so the company was in a difficult position, but I kind of knew it was coming. There was a similar concern from my girlfriend – she’s an air hostess, and both of us were thinking that between the two of us, at least one of us would lose our jobs, if not both.’
As part of his job, Tom was provided with a studio flat in London. ‘At the point I was made redundant, they said I couldn’t have the flat anymore,’ he says, ‘so I lost my home and my job on the same day.’
Others had entered into new positions, unable to predict what lay around the corner. Harriet, who started a new job in February 2020, was also let go before the government announced the furlough scheme.
‘I loved it – it was completely different to anything I’d done before, and I could see myself staying there for the foreseeable future,’ she says. ‘But the business was already losing revenue, so I was let go.
‘As soon as the government announced the furlough scheme, I called my boss and asked if it was something they’d be able to do for me – and they said they’d look into it, but of course at that point no one knew how it was all going to work, how to apply, any of that.’ It was weeks before Harriet heard from them again – weeks that she says were the worst of her life.
‘The government was too slow to act to protect jobs like mine,’ adds Tom. ‘My girlfriend works with people internationally and they knew at least two weeks in advance that, regardless of what happened, their jobs would be looked after under a furlough scheme in various different countries. So it seemed obvious to us that the government had to do something. Although the schemes that they eventually did bring in worked well for those who qualified for them, a lot of people have missed out.’
Harriet was eventually told she could be furloughed. ‘The wave of relief was huge,’ she says. ‘Now all I had to do was wait to go back to work – or so I thought. Instead I found out I was being let go again at the end of August.’
In Autumn last year, the government insisted there would no second lockdown, and therefore that furlough would not be extended. Instead, it was due to be replaced with a scheme that gradually reduced government input, leaving businesses to top up wages themselves – plans that predicted would lead to more lay-offs.
The U-turn came only six hours before the scheme was due to end, and although the government also eventually agreed that employees who had been laid off could be rehired and refurloughed, there were nonetheless a number of unnecessary redundancies.
‘At this point, the business had been able to reopen for a short period between lockdowns and various local tier systems, but I wasn’t able to go back to work because the workshop was too small and social distancing just wasn’t possible,’ says Harriet. ‘So they were only able to bring one of my colleagues back. After months of waiting to go back to work, I was jobless again. I was heartbroken.’
With opportunities for new jobs scarce, many of those made redundant have turned to Universal Credit (UC). By both European standards and Britain’s own historical standards, the current rate—around £96 per week—is desperately low. But for Tom, the trouble lay in the process as much as in the payment.
Tom’s redundancy came after the government had said those losing their jobs should apply for UC immediately. ‘The reason was that it takes five to six weeks for you to get a payment, and they have to process it,’ he says.
‘The day that I got my P45 issued to my home address I went and applied for UC, thinking that that was what I’d been told to do. No one told me you actually have to do it the day after you get your final pay cheque. Six weeks later they turned around and said, ‘No, you’ve had money from your employer, so you don’t qualify this time round.’ So I had to wait twelve weeks for my first payment after losing my job.’
Tom received £240 for an entire month. ‘I don’t know how anyone can make the numbers work on that without resorting to taking out a loan, and then you’re looking at really expensive debt,’ he says.
Meanwhile, many have continued looking for new positions. Mat, who had worked as a skills trainer for a brewery, pub, and hotel operator for three and a half years, was made redundant in November.
‘I haven’t found a permanent position as of yet, but I’m currently working as a delivery driver to keep an income coming in for my family,’ he says. ‘I’m not earning as much as I was, so we’ve made some cutbacks and adjusted. There’s little in my field of work, and branching out to something new is challenging – but there are less jobs and more applicants now.’
James, who worked in customer care for an online retailer, agrees that finding a job during the pandemic is almost impossible.
‘I’ve applied for a ridiculous number since leaving—too many to count—but I haven’t been successful,’ he says. ‘Nearly all the roles in my industry require at least a year or two of experience, but no one seems willing to help you gain those, especially for a graduate. During the pandemic I’ve done some freelance assistant work, but there’s little to no pay – paid gigs only just about cover my train fares.’
Tom has been in a similar situation – now for an entire twelve months. ‘This time last year, I was sending 100 emails a month, and I was just getting rejected from everywhere,’ he says. ‘It was really quite depressing.’
Young people have borne the brunt of these redundancies. Between January 2020 and January 2021, the number of people aged 16-24 claiming unemployment-related benefits rose by 120 percent. 2.75 million young people are now classed as ‘economically inactive’, up 227,000 since March 2020.
As a result, in September, the government announced a £2 billion Kickstart Scheme to offer temporary jobs to UC claimants aged 16-24. The government claimed that the Scheme would create 120,000 temporary jobs, but in January 2021, it was revealed that fewer than 2,000 young people had started new roles through Kickstart – a fraction of the 1.7 million unemployed, let alone the inactive.
Tom joined a company on the scheme. ‘They took me on and said they would pay my wages until the scheme kicks in, and then I’d get paid through that,’ Tom says. ‘But the scheme took such a long time to come in that I then turned 25, which meant I no longer qualified.’
Luckily, the company decided to keep Tom on – until he was made redundant again when the third lockdown was announced in January. ‘I worked on a self-employed freelance basis because they didn’t have the funds to employ me full-time,’ he adds. ‘When I was made redundant again, I hadn’t been self-employed long enough to qualify for any of the self-employed grants, so I was back on Universal Credit.’
The mental health consequences of all this disappointment and uncertainty are perhaps predictable. Harriet says that hers, which had ‘never been great’, took a new kind of battering in 2020.
‘I can’t even remember most of last year now,’ she says. ‘I just remember the frustration at the ‘Eat Out to Help Out’ scheme being introduced, and then all the messing about that seemed to happen when they introduced a tiered lockdown system. Things seemed to be forced to open again too soon, while infection rates were still high. Yet I still couldn’t go back to work because it wasn’t safe.
‘I couldn’t go back to work, but I could go to a restaurant full of people not wearing masks? That didn’t seem right at all to me.’
And its these kind of avoidable government failures, Harriet says, that hurt the most.
‘Seeing tens of billions spent on a track and trace system that doesn’t even work properly made me very angry, as I’m sure it made most people – seeing all that money handed to the government’s mates for things that don’t work, while people like me were depending on the furlough scheme and weren’t eligible for any other financial support without it.
‘It just felt like the government had decided that they couldn’t be bothered supporting people like me anymore,’ she adds, ‘and that we’d just have to figure it out on our own.’