EXANTE’s senior analyst, Victor Argonov says that the pandemic may have resulted in a long-term increase in structural unemployment, therefore a COVID-19 vaccine may not be the solution to jobless figures. With 36% of people either uncertain or unlikely to agree to vaccination, could the pandemic continue for many years?
He says: The Covid-19 pandemic has caused massive job losses on a global scale. In the November labour market overview, the UK Office of the National Statistics reported that the unemployment rate had risen sharply, while the employment rate was falling. Unemployment has increased to 4.8% of the workforce and is up 0.9ppts in the year to date. The share of the population aged 16 to 64 in employment has fallen by 0.8ppts to 75.3%.
“The annual increase in redundancies in the UK has been the largest since the height of the Global Financial Crisis. The rate of redundancies increased by 181,000 in July to September 2020. This however, does not reflect the full extent of the damage, with the furlough scheme extended to March 2021 we could further redundancies if the crisis has not been resolved by then,” he adds.
“The Pfizer announcement triggered a rush to secure the future supply of its vaccine among governments of developed countries. However, the beginning of the immunization process may not bring rapid relief to the economy. Matt Hancock could not provide an estimate of how many people need to be vaccinated. Neither has the government indicated how long it could take to inoculate all those who will be deemed eligible for vaccination. Additionally, on November 10 the Royal Society and the British Academy published a report estimating that to achieve herd immunity, 80% of the population or higher need to be immunised. In the UK around 36% people are either uncertain or unlikely to agree to be vaccinated. Therefore, governments need to redouble their efforts to combat fake news and persuade the populations that the benefits of vaccination outweigh risks. Otherwise, the Covid-19 pandemic may go on for many more months, if not years, and unemployment will remain elevated,” concluded Argonov.