We are in a jobs crisis with 600,000 fewer employees on payroll and 2 million more of us on universal credit. Tackling this economic and human tragedy will become the central economic challenge of the early 2020s.
The Bank of England expects almost one in 10 of the workforce to be unemployed, the highest for 25 years. But will unemployment fall as swiftly as it has surged?
Yes initially, but, beyond the immediate boost of shops reopening, history has some painful lessons for us. New US research tracking recessions and recoveries finds a consistent pattern: unemployment rockets in the crisis, but falls like a feather in the recovery (averaging falls of just 0.55% a year). Post-financial crisis, unemployment only came down 0.5% a year. The unemployment-heavy 1990s recession only saw slightly faster falls. Yes, unemployment fell faster earlier in the 20th century, but some major wars were involved. If our future looks anything like our past, we won’t see unemployment back below 5% until the late 2020s.
We must throw everything possible at avoiding that catastrophe: job guarantees and creation, wage subsidies, training and big bang fiscal stimulus. We don’t get to choose the challenges the world throws at us, but we do get to decide if we rise to them. It’s time that we did.
• Torsten Bell is chief executive of the Resolution Foundation. Read more at resolutionfoundation.org