Full scale of Britain’s job crisis uncovered in new research

Seven new private sector jobs will be needed to create one viable job post-pandemic

• Cities will lead economic bounce back but most new jobs are expected to be low-skilled and low-paid.
• Government must upskill workers and encourage higher-skilled businesses to invest in cities – particularly in the North and Midlands.

New Centre for Cities’ research in partnership with HSBC UK reveals that Britain’s jobs crisis is bigger than realised as the economy will need to create almost ten million new private sector jobs just to reverse the damage done by the pandemic.

Analysis of Britain’s ‘jobs miracle’ from 2013 to 2019 – when the national economy created 2.7 million net new jobs – finds that 19.3 million private sector jobs were created during this period and 16.6 million were lost. This meant that seven new private sector jobs were needed to create one viable job.

If this pattern repeats post-Covid then 9.4 million new private sector jobs will be needed to get the 1.3 million people who lost their jobs during the pandemic working again.

After the financial crisis big cities created the vast majority of new jobs and are expected to do so again post-Covid. London created one in four of all new private sector jobs (790,300) – equal to 17 Scarboroughs, or 25 Hartlepools. Other big cities also played an outsized role: in Manchester, 152,100 new jobs were created; in Birmingham 99,100 were; and in Glasgow 40,800 were.

In total, Britain’s ten largest cities created almost half (45.6%) of jobs during the ‘jobs miracle’, despite accounting for just 3.5% of land. In contrast, smaller towns and rural areas created 36% of new jobs. These findings underline the important role that big cities will play in helping the country recover from Covid-19.

Contribution of cities and non-urban areas to job creation, 2013-19

Source: ONS, Business Structure Database (BSD)

Many of the jobs lost in the pandemic were in sectors such as hospitality and tourism. While they are expected to recover quickly once the economy reopens, with an estimated three quarters of new jobs likely to come from sectors such as these, relying on them for new jobs will not address years of poor productivity and pay stagnation, particularly outside London and the Greater South East.

After the pandemic, the productivity problem that UK cities face will need to be addressed.

To do this the Government should invest in adult education to train people for higher-paid jobs in emerging industries. It should also recognise the crucial role that cities will play in building back better from the pandemic. It should invest £5 billion in a new City Centre Productivity Fund to make struggling city centres more attractive places for high-skilled businesses to locate.

The paper’s other proposals to help the country build back better from the pandemic include reforming business rates, which in their current form are a tax on business investment, and devolving more economic powers and resources to local government – particularly England’s metro mayors.

Centre for Cities’ Chief Executive Andrew Carter said: “Britain’s biggest cities will play a central role in our recovery from the pandemic, as they did after the last economic crisis when London alone created a quarter of all new jobs.

“We must use Covid-19 as an economic reset and address many of the long-standing problems that the economy has faced in recent years such as stalled productivity and stagnant pay. To do this the Government will need to focus on investing in adult education to train people for higher paid jobs.

“Addressing these problems will be be essential if the Government hopes to attract higher-skilled businesses in emerging industries to cities and large towns in the North and Midlands and meet its levelling up objectives.

Ian Stuart, CEO, HSBC UK said: “The employment challenge ahead for the country’s economy cannot be underestimated.

“Beyond the sheer volume of new jobs required, the UK will need to create high value, export-led employment across all regions, if it is to address the age-old productivity puzzle.

“Coming out of the Covid-19 pandemic, we will only truly succeed in levelling up the country if the challenge is shared between government and the private sector with a focus on reskilling our people and attracting new business growth and international investment in the sectors where we have a real competitive advantage.”