Coronavirus: Impact on the labour market

A summary of the latest labour market statistics is available in the Library paper, UK Labour Market Statistics.

The start of the pandemic

The beginning of the pandemic along with the first coronavirus lockdown in March 2020 had a dramatic effect on the labour market. There was a large fall in employment, while unemployment and economic inactivity (people not in work and not looking for work) both rose.

The number of people in work fell by 825,000 people between January-March 2020 and October-December 2020, while unemployment rose by almost 400,000 and the number of people who were economically inactive rose by 327,000.

Redundancies reached record highs while UK working hours dropped to the lowest since 1994.The number of people claiming unemployment benefits doubled between March and May 2020.

Labour market recovery

By the start of 2021, employment and unemployment levels began to improve but economic inactivity continued to grow, peaking in December 2021-February 2022 at 8.89 million, nearly 450,000 more than in January-March 2020.

This means that two years after the start of the pandemic, employment levels were still around 350,000 lower than they had been before it began. This was despite unemployment falling below pre-pandemic levels.

In January-March 2022, redundancies were below pre-pandemic levels, and job vacancies were at record highs.

Employment support schemes

Over 11.7 million jobs were furloughed in total on the Coronavirus Job Retention Scheme (CJRS). The number of jobs on furlough peaked on 8 May 2020, when 8.9 million jobs were on furlough. When the scheme ended on 30 September 2021 1.2 million jobs were still on furlough, but this did not coincide with a large jump in unemployment.

1.3 million claims were made to the Self-Employment Income Support Scheme (SEISS), which also ended on 30 September 2021.

Most affected groups

Some workers were disproportionally economically impacted by the pandemic.

• Unemployment rates for minority ethnic groups were higher than average before the pandemic and saw a larger increase between January-March 2020 and January to March 2022. People from minority ethnic group were more likely to experience a loss of income at the beginning of the pandemic. While unemployment rates have risen more for minority ethnic groups over the pandemic, employment rates have also risen due to decreases in economic inactivity rates.
• Employment among men has fallen slightly more than among women over the pandemic. An increase in economic inactivity for men means that women made up over 48% of the workforce in January-March 2022, a record high.
• The youngest and oldest workers were most likely to lose their jobs or be furloughed at the beginning of the pandemic. Youth employment recovered quickly from spring 2021, and had nearly returned to pre-pandemic levels by January-March 2022. Many older workers opted to retire early.
• Low paid workers were more likely to work in sectors most affected by the pandemic, particularly hospitality and non-essential retail, so were most likely to be put on furlough or experience falls in income at the beginning of the pandemic. However, the rise in vacancies in 2021 and 2022 was driven by low paying jobs and by February 2022 unemployment rates in low occupation had almost completely recovered.
• The employment gap between disabled people and people without disabilities widened during the pandemic, before returning to close to pre-pandemic levels.