What's Happening to the Labour Market under COVID-19? Part 2

So if unemployment, employment or more marginal types of working appear little changed under COVID, things are different from normal if we look elsewhere. Figure 1 shows the percentage of workers who say they had a job but were away and did zero hours during the survey week. The weekly norms show large spikes around Christmas, Easter and the summer holiday season. However, there is a notable departure from the norm that begins in week 10 of 2020 and increases rapidly to 24% of the employed by week 16 (four weeks into lockdown). This is around 5.4 million more workers away from their jobs than expected at that week in the year. By week 22, the start of the government’s gradual relaxation of lockdown, absences from work had fallen back to just under 20% of the employed workforce, but then rise again in week 26 (last week of June). There are around 31.5 million people in work in the UK. Adding up these work absences "excesses" from week 5 to week 26 suggests that have been around 69 million additional person-week absences from work since the crisis began. This is equivalent to the entire UK workforce doing nothing for 2 weeks and 1 day.

Figure 1. With Job but Not Working

The shock to output is somewhat larger than this because among the majority of employed still in work and not away, many were working fewer hours than usual. Some 48% reported working fewer hours than usual in lockdown week 12. The number of hours worked by the average (median) worker fell from the norm of 38 to 34 during week 13, (Figure 2), before gradually rising back to around 35 hours a week by week 26, still less than the norm for this week. Average hours worked usually drop at Christmas, Easter and the summer holiday weeks, but the departures from the norm in week 13 and afterwards are notable.

Figure 2. Total hours worked each week of those not away

Again we can estimate the number of hours lost among this section of the workforce by multiplying by the number of hours each person works relative to the norm. A "normal" week of work in the UK amounts to around 1000 million person-hours. If we add all the lost hours for every individual, the cumulative excess suggests a fall of 2400 million hours since the crisis began, equivalent to the entire workforce doing nothing for 2 weeks and 2 days.

Taking the job absences and the reduced hours together that's a combined loss of about 4 and a half week's output in the year so far - or a quarter of the usual amount of stuff. That, more or less, lines up with the estimated drop in GDP so far (see ONS )

But there is more happening that has the potential to affect future labour market developments. For that we need to read part 3 of this update.