The Challenges for Labour Market Policy during the COVID-19 Pandemic*

Monica Costa Dias*, Robert Joyce, Fabien Postel-Vinay, Xiaowei Xu

*Corresponding author for this work

Research output: Contribution to journalArticle (Academic Journal)peer-review

69 Citations (Scopus)

Abstract

The COVID-19 pandemic is having a dramatic economic impact in most countries. In the UK, it has led to sharp falls in labour demand in many sectors of the economy and to initial acute labour shortages in other sectors. Much more than in a typical downturn, the current crisis is not simply a general slowdown in economic activity but also a radical short-term shift in the mix of economic activities – of which an unknown, but possibly significant, amount will be persistent. The initial policy response has focused on cushioning the blow to families’ finances and allowing the majority of workers and firms to resume their original activities once the crisis subsides. These are crucial priorities. But there should also be a focus on reallocating some workers, either temporarily if working in shut-down sectors or permanently by facilitating transitions to sectors and jobs offering better prospects and facing labour shortages. The phasing-out of the furlough subsidies, which is projected to happen in Autumn 2020, brings this into even sharper focus since the alternative for many workers will be unemployment. Active labour market policy will need to be front and centre.

Original languageEnglish
Pages (from-to)371-382
Number of pages12
JournalFiscal Studies
Volume41
Issue number2
DOIs
Publication statusPublished - 1 Jun 2020

Bibliographical note

Funding Information:
The authors gratefully acknowledge funding from the ESRC‐funded Centre for the Microeconomic Analysis of Public Policy (ES/M010147/1) and from the European Union Horizon 2020 programme on Dynamics of Inequality across the Life‐Course (Dial ES00142).

Funding Information:
The authors gratefully acknowledge funding from the ESRC-funded Centre for the Microeconomic Analysis of Public Policy (ES/M010147/1) and from the European Union Horizon 2020 programme on Dynamics of Inequality across the Life-Course (Dial ES00142).

Publisher Copyright:
© 2020 The Authors. Fiscal Studies published by John Wiley & Sons Ltd. on behalf of Institute for Fiscal Studies

Keywords

  • COVID-19 pandemic
  • job vacancies
  • labour demand
  • labour market policy
  • labour supply
  • wage subsidies

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