Trying to work out what the labour market is going to look like in three months, six months, a year and even beyond is currently a bit like trying to pick the winner of the 2050 Grand National. Since it is absolutely unprecedented for vast parts of local, regional, national and international economies to effectively be turned off at the tap at the same time, it is far from clear just how bad the damage might be.
One thing we can say is that when the data does emerge, it is likely to show an extremely damaging landscape. Unlike the UK, the United States releases job figures on a weekly basis, and so far the shutdown of vast swathes of that economy has proven to be devastating. Up to 13th March, there were 7.1 million unemployed — around 4.4%. Since then, almost 26.5 million more people have filed initial unemployment claims which, when combined with that 7.1 million, takes the total unemployment figure to over 33 million. That is an unemployment rate of around 20.6%, which is the highest since 1934, and possibly closing in on the highest ever rate of 23.6% in the Great Depression of 1932 (see here).
Unfortunately, we don’t yet have much official data in the UK to give us a complete picture of what is happening. We know that there have been 1.5 million new claims for Universal Credit since measures were imposed by the Government in March, and whilst this suggests less of an impact than in the US, it is still bleak. The Office for National Statistics is releasing a special fortnightly Business Impact of Covid-19 Survey (BICS), which covers things like workforce demands and furloughed workers, but the data only covers a small sample size (the latest release had 6,171 responses) and focuses on broad indicators, rather than giving detail about the size of changes to jobs in different parts of the economy. The first real indication of local occupation effects will only come with the release of claimant counts showing the period up to 9th April, but that is still a way off, being scheduled for release on 19th May. As for hard data on regional industries and jobs, this won’t be available until September or October with the scheduled release of Workforce Jobs and Annual Population Survey (both covering Q2).
Be that as it may, how can our data currently help you get a handle on what is going on in, in your local economy right now?
LMI is still the best baseline
The first thing to say is that our existing Labour Market Insight is still of enormous value as a baseline for future planning, and the reason for this is that local economies have a high degree of path dependency, by which we mean they don’t tend to radically change their industry make up, even in downturns. For instance, a local economy with a high specialism in Precision technology will have a workforce and an infrastructure geared to serving industries within that cluster. This means that even if many Precision technology companies cease trading during the time of recession, it is likely that when that economy begins to emerge from the slump, businesses that utilise the skills and infrastructure already existing in the locality because of the history of Precision technology will move in to area. Our LMI is therefore still an extremely valuable guide to the fundamentals in your local economy.
Projections will need to be adjusted with new data
That being said, we inevitably get questions about what the future will hold, and how our data can help you understand it. Here, we need to point out that although our data goes out nine years into the future, these are projections, not forecasts, which are two very different things. Projections are estimates of future trends based on past and current trends, whereas forecasts are estimates based on what forecasters consider the most likely scenarios. Our projections, by definition, are based on what was happening in the labour market before the crisis, and so do not take account of what is happening in the labour market right now. However, when the official data is released for the crisis period, we will of course adjust our projections, on the basis that we’ll have hard data to work with. Although this is of course far from ideal, it is worth pointing out that forecasters are in an even less enviable position, since the current circumstances make the business of forecasting even more speculative than normal.
Job Posting Analytics
Along with using LMI as a baseline, the best source of labour market insights out there in a time of flux is Job Postings Analytics (JPA). Although they can be somewhat noisy, especially as small changes in posting practices can create oddities, they give a good indication of what is going on in terms of employer demand, which is why we have made much use of this source of data during the crisis, particularly on our Employment Data Dashboard. It is worth noting that you can access our JPA through our Analyst tool, and it can be used to get a sense of employer demand in your area in terms of the jobs companies are looking for, the skills they need, and the actual businesses that are hiring.
Analyst’s Input Output tool
One other very important tool that we can offer you at this time is our Input-Output model. This allows you to run impact scenarios to see how declines (or growth of course) in certain industries have knock-on effects on other industries, and your local economy in general, from the point of view of both jobs and earnings. To get a sense of what this looks like in action, check out our recent report into the shutdown of the Restaurant and Pub sectors to see how it can be used to show the multiplier effect of job losses in one industry across your economy. This really is a powerful tool that is normally only used in academia and by economists, but which you can get access to as part of a subscription to our Analyst tool.
Monthly claimant count data
As we mentioned above, the release of claimant count data in May will be the first official dataset giving us an indication of how badly the labour market has been affected during the crisis. The good news is that we will be adding this into Analyst on a monthly basis, and this should — over time — serve to show where the major unemployment is occurring, both from an industry and a regional perspective. We’ll let you know when this is released, together with analysis showing some of the most important details to emerge, as well as how you can use it to understand the situation in your area.
As ever, do let us know if there’s anything we can be doing to help you get a better understanding of your local economy.