Covid Job Losses Could Widen England's North-south Divide

A recent study conducted by Labour shows that the job losses happening as a result of the coronavirus could widen the divide between the North and South of England. 

Thanks to COVID-19’s impact on the economy, the north-south divide could be made worse, with particularly vulnerable sectors such as manufacturing, hospitality and retail dominating the jobs market across certain regions. 

As a result of its findings in this survey, Labour is urging ministers to reconsider the decision to end the furlough support scheme. The Treasury’s furlough scheme is set to come to an end in October.

Currently, around  9 million workers have been placed on the furlough scheme, under which the government pays 80% of their salaries – up to £2,500 a month.

The scheme had been due to end in July but was extended by the chancellor, Rishi Sunak, until October. It is currently not set to continue beyond that date. Labour argues that the resulting redundancies in the most vulnerable sectors when the furlough scheme ends will risk deepening and cementing regional inequality. 

The retail sector in particular has been badly hit by cuts in recent weeks, with major retailers such as Marks & Spencer, John Lewis, Boots and Debenhams making substantial cuts to stay afloat during these trying times. Labour’s survey shows that more than 10% of the entire workforce in north-west England are employed in retail, which equates to around 351,000 people. Should the furlough scheme end and further redundancies be required, this could have a devastating impact on this area. 

Not only that, but in the East Midlands, 13% of people, which is around 265,000,  are employed in the manufacturing sector, which has been hugely impacted by COVID-19. The manufacturing sector also accounts for between 10 - 12% of all jobs in Yorkshire and the Humber, Wales, the north-east and north-west and in the West Midlands too. 

To highlight why this might impact the north-south divide in England, by contrast, only 112,000 people in London (roughly 2.2%) for the manufacturing industry, according to the business register and employment survey from the Office for National Statistics.

The manufacturing trade group Make UK carried out a survey in July of its members that showed companies planning to make redundancies in the coming six months had risen from 25% to 53% in a two-month period.

It’s clear, therefore, that some parts of England will be disproportionately hit by the impending jobs crisis thanks to the coronavirus pandemic.

A government spokesperson said:

“We have acted quickly to deliver one of the most generous and comprehensive packages of support in the world worth an initial £160bn for all sectors – including the manufacturing industry.

“This includes supporting nearly 9.6m jobs through the furlough scheme which employers across the UK have used to support their staff.”

It is unclear at this moment whether the furlough scheme will be extended onwards from October, and the impact that this will have on many industries across the UK. Unfortunately, it does seem likely that the substantial jobs crisis has only just begun, and that this could see a widening of England’s north-south divide.