On Notice: Estimating the impact on redundancies of the Covid-19 crisis
This briefing note uses newly released data from employers planning 20 or more redundancies alongside historic estimates of actual redundancies, in order to estimate the potential path of job losses this year. The figures on planned redundancies are from official returns provided by firms to the Insolvency Service via ‘HR1 forms’, and were released to IES on Monday 7 September following a Freedom of Information request. Estimates of the actual historic level of redundancies are taken from the Labour Force Survey.
Our analysis finds that redundancy notifications by employers are running at more than double the levels seen in the 2008/9 recession. Part of this rise may be explained by increased compliance with HR1 reporting requirements, but the vast majority is a consequence of the covid-19 pandemic and its economic impacts. Our central estimate is that this may lead to around 450 thousand redundancies in the third quarter of 2020 – significantly higher than the quarterly peak in the last recession (of just over 300 thousand) – and a further 200 thousand redundancies in the final quarter of the year.
The briefing note concludes with recommended measures to seek to minimise and respond to these job losses, through:
- A reduction in labour costs, so as to stimulate employment demand and new hiring;
- Tightly targeted wage support for disrupted but otherwise viable industries and areas;
- Guaranteed access to rapid, high quality employment and training support for those facing redundancy;
- Increased and visible enforcement of employment and redundancy rights; and
- Regular publishing of detailed HR1 data, to enable local economic partners to respond.