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Economics Assignment: Determining UK Unemployment Rate During COVID-19


Prepare a detailed economics assignment addressing “What happened to the unemployment rate in the UK during the pandemic and why?”


UK Unemployment Rate during the Pandemic

The recent Covid-19 pandemic has brought up some impressive statistics about the labor market and economic functions worldwide. The UK is no exception. Despite being the fifth-highest economy globally, the country has endured some severe impacts of the pandemic in their Gross Domestic Production (GDP) rate and the general graph of the labor market. The reasons behind these negatively declining statistics are almost standard for the majority of the nations during the pandemic situation (Kurosaki, 2018). The following sections will provide a detailed analysis of the UK's case in terms of unemployment and labor market data during the crucial pandemic period. 

Labour Market during Pandemic

The lockdown measures of restricted transport and social distancing rules have brought huge sectors of commercial activities to a pause. Very few business entities managed to retain their existing workforce. New recruitment has gone significantly low in rate during the time. Companies did not create new posts due to their resource constraint and reduced profit. The situation delivered the highest unemployment rate in the UK in the last four years, which is 5% of the total employable population (The Guardian Staff Report, 2021). Apart from this 5% of the completely unemployed eligible population, the country has seen millions of workers on furlough or forced unpaid leave by private entities. Though these populations do not come in the statistics of unemployed data, they have faced no income months during the stricter lockdown. An estimate of more than double the unemployment rate came out from the Office for Budget Responsibility, considering the post-pandemic situation. According to the report, 7.5% of eligible people might go jobless even after the initial recovery from the pandemic. The countable heads of 7.5% refer to more than 2.6 million people being jobless (The Guardian Staff Report, 2021). The data is derived from the strict lockdown imposed on Scotland, Northern Ireland, and Wales. The unemployment graph with its point of 5% refers to 1.7 million unemployed people, which is significantly high according to the nation's total employable population (Kumar and Hashmi, 2020). Economists have predicted higher unemployment due to the termination or possible resignation of the furlough employees. The most affected generation of this crunch in the labor market is the young generation, with low-paid staff working in retail, art and recreation, storage and transport, leisure, and hospitality industries. 

Post-pandemic Situation

The situation came under remote control following the primary recovery phase of the pandemic. The unemployment rate decreased by .5% in the first half of 2021 (The Guardian Staff Report, 2021). New posts in various industries emerged, and recruitment started to escalate. Despite the growth of the employment graph, economists predict a massive setback in the employees' compensation package. It is unlikely for the existing employees to receive a pay hike following the pandemic. The new entrants in the labor market will be bound to agree to join the workforce in a compromised wage package bearing the burn of unemployment in the last fiscal year in mind. The government has taken a few steps to recover from the disaster. They increased universal credit benefit value, the reduced interest rate of the central banks, issued guidelines for private sector employers and took other small experimental measures to improve the situation. 

Possible Reasons behind the Situation

The reason for the falling employment rate during the pandemic is manifold. The key reason is the government's faulty economic and labor welfare policies. The majority of the countries in the global economy have adopted open-market capitalism either directly or indirectly in their commercial approaches. Globalization has necessitated this adoption of an open market for most tier one nations. Like all other major economies except China, UK's service sector has shifted to the hands of private business and industries massively (Nayak et al., 2020). There are very few options for public service under direct governmental organizations. Semi-privatization of public sectors has added to the misery further. Globalization has demanded a free market for corporations all across the border. They accept a free or open market economy requiring reduced government control on private-sector jobs and the labor market. Hence, the corporate operates for-profit mainly and hardly for the labor welfare or sustainable economy of the nation or the world in larger contexts (Nayak et al., 2020). This very structure of open market capitalism creates massive risks in the labor market of the UK economy, like many other nations. The disparity of wealth distribution among the owners of capital and the laborers, who generate the surplus for the owners' profit, becomes very apparent due to this economic approach. This very uncertain labor condition is the result of open market dynamics. 

During the pandemic, the regular operations have come to a standstill. The global crisis of production and supply chain reflected on the industries of the UK, massively run by the private owners of the business. Hence, the first curative measure considered by the business owners is cost-reduction on human resource management. The scenario was common for all nations and their private-sector job market. Forced termination, superannuation, reduction of job vacancies, and abolishment of posts became rampant to recover the business owners' financial loss. Practically, the pandemic just unveiled the already broken economy and commercial practices systems across the borders. Some nations suffered even more than the UK, owing to their population and developing economic status. UK's job market is slowly recovering from the damage of the pandemic, as the recent data shows an increased interest in hiring a new workforce among employers (Nayak et al., 2020). However, despite the signs of recovery, the situation will take considerably longer to get back to the pre-pandemic shape.


The paper reflects on the changes faced by the UK labor market. It indicates the importance of revising government policies for employment and job creation. The explanation applies to all major economies of the world. The pandemic has affected the UK's labor market, but the problems that led to the damage already exist in the uncertainties of the labor market. The future of the labor market in the UK will also face troubles in terms of the compensation package and hike in salary, as the damage caused to the profit of business owners will continue to remain a common excuse behind these decisions.


Khan, M., 2016. HRM in the South Asian Context: A Comparison of HRM in India, Pakistan, and Sri Lanka. Sarhad Journal of Management Sciences, 2(2), pp.207-218.

Kumar, A. and Hashmi, N., 2020. Labour Market Discrimination in India. The Indian Journal of Labour Economics, 63(1), pp.177-188.

Kurosaki, T., 2018. Informality, Micro and Small Enterprises, and the 2016 Demonetisation Policy in India. Asian Economic Policy Review, 14(1), pp.97-118.

Nayak, P., Mishra, V., Singh, M. and Tambuwala, M., 2020. Impacts and consequences of COVID-19 epidemic on global economy. Economics assignment Coronaviruses, 01.

Purhonen, S. and Wright, D., 2018. Methodological Issues in National-Comparative Research on Cultural Tastes: The Case of Cultural Capital in the UK and Finland. Economics assignmentCultural Sociology, 7(2), pp.257-273.

The Guardian Staff Report. 2021. UK jobs market booms despite end of furlough scheme. the Guardian. Retrieved 4 December 2021, from

Wadsworth, J., 2018. Off EU Go? Brexit, the UK Labour Market and Immigration. Fiscal Studies, 39(4), pp.625-649.


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