Not every economic think tank can associate a report on a national jobs crisis with a provocative film from the 1990s. Resolution Foundation have done just that, publishing a report under the title “The Full Monty: Facing up to the challenge of the coronavirus labour market crisis.” Launched today as part of a webinar panel discussion, the report makes a late-June survey of the ways that coronavirus has negatively impacted the Hospitality, non-food Retail, Tourism and Leisure.
The first of three panelists was Nye Cominetti, a co-author of the report and one of Resolution Foundation’s in-house economists. After commenting on the sector-specific, youth and low-income tags of the economic shock from COVID-19, Cominetti went on to explain scale. One quarter of furloughed employees expect to lose their jobs once the scheme completes, a view that employers align by expecting mass redundancies within three months of the termination of furlough. While these numbers are speculative, they amount to in excess of 1 million people moving into unemployed status by the end of the year. Cominetti continued to explain:
- Don’t expect a V-shaped recovery: Current low inflation means that the pandemic won’t recover like the last economic recession when less wage adjustment meant that employers could afford their workforce.
- There are limits to labour reallocation: Profits have been falling since 2016 in sectors where cash flow is essential. Roughly half of businesses in Hospitality have cash to survive for only three months. Some employees will be able to move sectors, but “it’s implausible… to expect reallocation en masse.”
Policy responses from Cominetti were also two-fold: minimise outflows from those hardest hit, indeed business that were thriving before coronavirus stuck out. A Job Protection Scheme (not Job Retention Scheme) is recommended - a scheme to subside 10% wages at the government cost of £5 billion. Second, maximising inflows to in-demand roles could shift unemployment, with a focus on social care and retrofitting, identified later in the webinar as the process of upgrading the quality and environmental efficiency of buildings. Spend £3.96b to create 180,000 new social care jobs, Cominetti suggests, and double down on Job Centre Plus work coaches.
Cominetti was followed by Kate Nicholls, CEO of UKHospitality who have been the foremost voice for the industry throughout COVID-19. Nicholls first indicated the scale of the sector: 3.2 million people are directly employed in Hospitality in the UK, including a further two million involved in supply chains. 60% of Under 30s are employed in the sector, which is a key entry point to developing a range of professional skills. One in six net new jobs since the 2009 recession were created in the sector, now accounting for 11% UK employment.
In explaining the sector’s experience of COVID-19, Nicholls reminded us that the it first felt the impact by the end of January when international business travel began to reduce, nearly two months before the national lockdowns were triggered. During the first quarter of 2020, revenue was down 21% when compared with 2019. An astounding 87% employees were put on furlough, a total of 2.8 million people not including 300,000 seasonal workers who weren’t retained, normally employed from April to the end of October. UKHospitality’s research suggests that 53% venues plan to open in some format during July, with most hotels with leisure facilities holding back - there is “no line of sight,” says Nicholls.
Scotland’s chief economist, Gary Gillespie, was the third and final panelist. Re-openings are from 6th July, lagging behind England’s 4th July weekend. Gillespie reminds us that sector is not in structural decline, echoing Nicholls, but shows promise. When things started to go south during COVID-19, 23% of the drop in Scotland’s GDP can be accounted to reduced activity in Hospitality, Tourism and Leisure,
A 20-minute Q&A section allowed half a dozen questions from the lively Q&A to be answered, as well as the completion of a couple of polls. One poll queried the accuracy of Office Budget Responsibility (OBR) who forecast that unemployment will rise as high as 10%. A second poll to do with unemployment and how to reallocate workers in jobs: 42% opted to protect existing jobs, with 34% polling for matching people to new jobs through training and support. 24% voted to create new jobs directly.