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Warnings given on long-term impacts of Covid on UK employment

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With the furlough scheme coming to an end in September Renovo‘s MD Chris Parker is warning of five hidden impacts of the pandemic that could have a much longer-term impact on the UK employment market.

“Last year, the pandemic created a very sharp impact on the job market, which was incredibly difficult for employees and employers alike,” Parker explained. “In the midst of the crisis, some employers needed to cease trading altogether while others cut operational costs suddenly, meaning many millions of people were furloughed or made redundant.

“In recent weeks there has been much more positive news about employment in the UK with the number of people on furlough reducing, redundancy rates decreasing, unemployment figures dropping and reports of hiring shortages across many sectors. Against that backdrop, it would be easy to assume that the UK employment market is in recovery.”

However, according to Renovo, although the current positive indicators are very welcome, these could be disguising five longer-term issues that could have a much more longer-term impact on UK employment.

Five potential longer-term impacts on the job market:

  1. Increase in outsourcing – The success of remote working for many organisations has enabled them to challenge previously held beliefs about the types of roles that could be managed remotely. This could well result in a significant increase in the outsourcing or offshoring of a host of white-collar roles that would not have previously been considered for outsourcing. A recent Tony Blair Institute report claimed that up to 6 million white collar roles may be lost from the UK to outsourcing before 2040, impacting roles such as software programmers, accountants and insurance underwriters.
  2. Office consolidation – Organisations are now thinking very differently about physical office space and it is expected that roles will be centralised into a smaller number of office locations for many organisations. For those role types that are deemed not suitable for remote working such as receptionists, domestic services and facilities management, the increase in levels of office consolidation across the UK could have a major impact.
  3. Accelerated decline of key industries – there has been an accelerated decline of key industries, not least the retail market which has traditionally been a major employer in the UK. The pandemic has led to a huge increase in online shopping which will continue to impact customer footfall in shops. Traditional retailers are moving their businesses online and the number of employees needed are declining, which particularly impacts younger and part-time workers.
  4. Supply Chain disruption – while the UK vaccination programme is providing some optimism of a return to something like normality over the remainder of 2021, this is not the case in many parts of the world. For many UK employers that trade, manufacture and buy internationally, there may well be a sustained and prolonged impact on supply chains, services and manufacturing capabilities for years to come, further compounding anticipated challenges post Brexit.
  5. Releasing the backlog of change activity – an environment of disruption and uncertainty for organisations over the last 18 months has meant it has been very difficult to make and execute longer term, strategic workforce planning decisions. As such, particularly through 2021, Renovo has seen many organisations postpone or delay significant change programmes. As organisations now begin to look again to the medium- and longer-term, with a clearer vision of what their new normal looks like, an increase in change activity into 2022 is expected as organisations begin to execute workforce plans that have been shelved for some time.

Parker added: “None of these 5 factors will impact the picture for UK employment overnight. To a large degree, the longer-term impact of Covid has been to simply accelerate trends that were already present. Naturally, there will be a more acute impact for certain parts of the employment market than others that are still difficult to predict. What is clear, however, is that the post pandemic period will be characterised by significant changes to the UK employment landscape”.