Questions and answers about coronavirus and the UK economy
Questions and answers about coronavirus and the UK economy

Life and livelihood, health and wealth

In the face of the second wave of Covid-19 and renewed lockdown, it’s vital to understand what’s happening to people’s jobs and pay; and what’s happening to their mental health – the double jeopardy of ‘a risk to both life and to livelihood, a risk to both health and wealth’.

Newsletter from 13 November 2020

The UK death toll from Covid-19 passed 50,000 this week, a sombre reminder of the human costs of this crisis. While hopes of an end in sight have been raised by news of a vaccine, the pandemic continues to pose what Bank of England chief economist Andy Haldane calls a double jeopardy – ‘a risk to both life and to livelihood, a risk to both health and wealth’.

Last week, the Economics Observatory released a short film – Economics Meets Epidemiology – exploring the collaboration between economists and public health experts designing policy responses that can improve both health and economic outcomes. This week, we focused on two key elements of those interactions in the face of the second wave of the virus and renewed lockdown: what’s happening to people’s jobs and pay; and what’s happening to their mental health.

Work and wellbeing

Since we launched in June, a number of Observatory articles have focused on the effects of coronavirus on the world of work, including a comparison of the US and UK labour markets; examinations of the experience of the self-employedapprentices and young people starting their careers; and a series of pieces on the job furlough schemes.

Some of our most recent posts look at monthly UK labour market data from the Office for National Statistics (ONS), which were released on Tuesday with the latest information on employment, earnings, redundancies, benefit claims and vacancies. Rory MacQueen at the National Institute of Economic and Social Research (NIESR) focuses on wage growth, showing the recovery in average weekly earnings over the summer, but the continued wide variation in earnings across the economy – in part due to differences in sectors’ shares of furloughed workers.

Figure showing degree of furloughing & wage growth

In one of our new ‘dataviz’ pieces, Jonathan Wadsworth at the Centre for Economic Performance (CEP) comments on redundancies, which have been widely touted as being at ‘record highs’. But as Jonathan explains, that doesn’t account for the fact that the workforce is much bigger than it was 25 or even ten years ago – now at 33 million workers, four million more than at the start of the 2008 recession. Put in that context, we are still some way off the dark days of 2008 and not remotely close to the experiences of the 1980s.

In another data article, Steven Proud at Bristol shows how the 18-24 age group is bearing the brunt of job losses. This resonates with my last newsletter – on ‘Generation Covid’ – which highlighted how the pandemic is causing particularly severe damage to the lives of school children, university and college students, and young people starting out in the labour market.

Figure showing employment by age group

The labour market’s link to mental health comes in a fascinating article by Fabien Postel-Vinay of University College London and the Institute for Fiscal Studies (IFS), who has written for us before on the challenge of getting good matches between employees’ skills and employers’ needs – and how labour market policy can help get people back into the ‘right’ jobs as the economy recovers from the crisis.

His new piece explores the adverse effects on mental health of job and income loss, of being in a low-paid job and of changes in working conditions. In particular, he looks at the exposure to stress in different occupations, which understandably affects future mental health. There is clear evidence that the crisis is not only increasing the stress levels associated with certain occupations – the NHS, social care and other key workers – but that people are also moving from their old jobs into new ones that are potentially more stressful.

Figure showing exposure to stress, vacancies

Previous Observatory pieces on mental health challenges of the pandemic include the impact of the social isolation of lockdown on people’s wellbeing; the disproportionately big effects on the mental health of ethnic minorities; and the wellbeing of adolescents.

On related issues, this week, the Economic and Social Research Council, which funds the Observatory, announced the winners of this year’s ‘Celebrating Impact’ awards, which includes important work on adolescent mental health by Emla Fitzsimons and Praveetha Patalay at the Institute of Education at UCL; and a lifetime achievement award to CEP’s Richard Layard for research informing public policies for employment, skills, wellbeing and mental health.

Round-up

Other topical Observatory pieces worth reading:

– Funding national healthcare systemsLuigi Siciliani at York looks at challenges to the financial sustainability of hospitals and primary care providers resulting from a reduction in services due to patients’ fears of infection.

– Basing offers of university places on A-level results not predictionsLindsey Macmillan and Gill Wyness at the Centre for Education Policy and Equalising Opportunities at UCL summarise evidence suggesting that teachers typically over-predict and that some school students’ grades are harder to predict than others – both potential reasons for moving to a ‘post-qualification model’, as proposed this week by the University and College Admissions Service (UCAS).

– Rationing essential goods in an effort to prevent panic buying and shortages: IFS researchers Martin O’ConnellÁureo de Paula and Kate Smith find that spikes in spending before the March lockdown were driven by many more households than usual buying these products, rather than a small number of people buying extreme amounts.

– The vaccine and the stock marketJohn Turner and Gareth Campbell at Queen’s University Belfast dig into the reactions of share prices of different companies and sectors to the news from Pfizer and BioNTech.

Table showing FTSE All Share Sectors

#economicsfest

Next week is the annual Festival of Economics in Bristol, co-programmed by Observatory director Richard Davies and Diane Coyle, who founded the event eight years ago and is one of our lead editors.

We’ll be reporting on some of the conversations, which will include Diane talking to Shriti Vadera, who was a minister in Gordon Brown’s government during the global financial crisis; and Richard talking to former Office for Budget Responsibility chairman Robert Chote and to Anne Case about his book on Extreme Economies and her book with Angus Deaton on Deaths of Despair and the Future of Capitalism.

I’ll be moderating a couple of sessions on diversifying and decolonising economics as well as a discussion of rebuilding after the pandemic in Bristol and the West of England. Since the festival is happening online this year, you don’t need to be in town to join us – please come along!

Romesh Vaitilingam, Editor-in-Chief

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