The UK labour market could suffer permanent scarring as a result of the coronavirus, according Bank of England chief economist Andy Haldane, who told ITV’s Robert Peston in an interview that there’s “a good chance” that coronavirus will accelerate a shift toward knowledge-based digital industries that was already in train before the pandemic ravaged the economy.
It was not clear when the interview was filmed.
Businesses such as retail and travel will be forced “to reinvent” their business plans, Haldane said, adding that the UK is currently “ill-equipped” to train the next generation of workers, who could well be employed into their sixties and seventies.
The programme ran just hours after the UK’s top finance official, Chancellor of the Exchequer Rishi Sunak, unveiled a government plan to top up wages of those working reduced hours as a result of the pandemic. Employers will also be required to contribute, but the plan does not address the plight of workers facing unemployment when the government’s current support expires at the end of next month. The Job Retention Scheme, introduced in March, covers 80% of the wages of furloughed workers, up to a cap of £2,500 a month. The plan supported more than 10 million roles over the spring and summer, and economists believe that a large number of three million employees still covered by the scheme could face unemployment come November.
Haldane expressed optimism, however, that the Covid-related economic downturn could “provide the opportunity to rethink our approach to skills, to digitisation,” noting that governments, central banks and businesses have responded more quickly than expected to the changes presented by the virus.
Haldane has been one of the more optimistic members of the Bank’s Monetary Policy Committee and has claimed that the UK is expressing a V-shaped recovery.