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High Wage Areas Lost Most Jobs During The Pandemic

Latest PAYE and furlough data indicate an uneven impact of the pandemic on jobs, with some geographic areas of the UK being much harder hit than others.  Employee numbers are back at, or close to, pre-pandemic form in many regions, but in London the jobs recovery has a long way to go as jobs numbers are severely suppressed here.  Other regions that are suffering include Scotland and the south east of England.

In their latest report, this geographic trend identified by the Resolution Foundation comes despite their previous research showing lower-wage workers have been worst affected by the impact of the pandemic on the labour market.

Jobs and economies in different UK regions often vary according to the particular sectors within that geographic area, e.g. some places are more biased towards tourism, however this does not explain the lag in jobs recovery and suggests that there is a drag factor in some locations.

Cities are worse off than their less urban counterparts, and the reluctance of workers to return to offices is clear – which also has implications on demand and therefore jobs.  Furthermore, high income individuals have cut their spending, another factor resulting in less local demand (and less jobs) in affluent locations.

This theory is backed up by the data which does indicate that the jobs recovery is slowest in more affluent areas.  It is therefore likely that those workers suffering the most from the pandemic are lower earners in higher wage regions of the UK.

It is too early to know whether the geographical variation in recovery will continue apace.  As many businesses adopt hybrid working arrangements (meaning less commuting and therefore less demand) it remains to be seen whether the surge in home-based jobs will be sufficient to counteract the current regional inequalities.

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