Unemployment calculator will help reduce mass unemployment

Essex economists are developing an unemployment calculator to identify the best job retention and retraining schemes in a bid to reduce the potential for mass unemployment caused by COVID.

Whole industries have been devastated by the pandemic with many fearing they will never recover – potentially leaving millions without work and the country facing deep recession.

In response the Government has introduced the furlough scheme, aimed at keeping companies going and people in work, and have promised retraining programmes for those who lose their job.

But as Professor Carlos Carrillo-Tudela, from the University of Essex, explained, it is not as simple as that: “The current assumption is that people can just retrain, but we know from past experience that when we are in a recession, that’s the time people are least likely to look for a job in new occupations.

“Changing careers comes with lots of risks, including potentially less job stability and lower earnings. So it is a trade off, and in uncertain times, when salaries are generally down and firms are not hiring, many people choose to stick with what they know, rather than trying something new, creating a large pool of unemployed people all waiting and looking for jobs.”

Professor Carrillo-Tudela and his team from Essex and the University of Edinburgh, will use computer modelling to predict how unemployment and inequality will be affected by COVID.

From this they’ll develop the unemployment and inequality calculator which could help government officials and others to test the impact of proposed policies, aimed at combatting the recession, before they are introduced.

The data for the modelling will come from Understanding Society – the household survey, which captures information about life in the UK by regularly questioning 40,000 people about their lives.

Run by the Institute for Social and Economic Research (ISER), based at Essex, the survey has years’ worth of data, including information specifically about the impact of COVID – since June last year, respondents have been asked if they are job hunting, and if so whether they are considering a career change.

“With COVID certain sectors have been affected much more than others – which is different from the financial crisis of 2008, when although there were differences between sectors they were much less.

“The speed of the UK’s economic recovery depends on the extent to which the unemployed move from harder hit sectors to those that are booming. More reallocation could make the increase in unemployment short-lived, boosting the UK’s chance of a swift economic recovery.”

To deal with unemployment, the Government will need to introduce policies to encourage movement. But it is essential that people are not forced to move into lower paid jobs with less job security, worsening existing trends in inequality.

 “Our work will allow us to provide a new perspective to the current debate on how best to bring people back to work.” added Professor Carrillo-Tudela.

The research team includes Dr. Alex Clymo also from the Department of Economics at Essex and Professor Ludo Visschers, from the University of Edinburgh.

The study, which has been funded by the Economic & Social Research Council (ESRC), as part of UK Research & Innovation’s rapid response to Covid-19, is due to run until June 2022.