The official unemployment figures that have just been published for the last quarter of 2020 reveal the continued economic impact of COVID-19 on Britain’s ethnic minority groups. Among all groups, Black African/Caribbean people fared worst, with unemployment rates reaching 13.8% in the period from October to December 2020. The White unemployment rate has not reached that level since the early 1990s, and was 4.5% in the same period.
As you can see in the charts below, unemployment initially held steady for men and women from White and ethnic minority groups in the first full quarter after the March 2020 lockdowns. But there were sizeable increases during summer 2020, with the labour market particularly unwelcoming to ethnic minority workers.
Unemployment rate by ethnicity and gender
The government’s much-vaunted furlough scheme appears to have muted the unemployment figures in what is the worst economic downturn in modern history, but this policy response has not been race neutral. Ethnic minority people experienced a similar loss of working hours to White people, and yet 15% fewer workers from this group were furloughed and 13% more became unemployed.
Much of the increase in joblessness has been driven by the fact that younger workers have poorer prospects – this is in keeping with previous recessions. And from analysing the two post-COVID quarters of data available from the Office for National Statistics’ Labour Force Survey, there exists a large ethnic disparity among 16-24 year olds. The youth unemployment rate among ethnic minority groups is estimated to be in the region of 20%, much larger than the 12% faced by White youths. Why is this?
Ethnic minorities and recessions
It is well known to researchers that recessions affect ethnic groups differently. Previous studies have noted that ethnic minority unemployment rates rise faster at such times. In the literature these rates are said to exhibit “hypercyclicality”, or a supercharged response to the economic cycle.
In both the early 1980s and 1990s, people from Black and Pakistani/Bangladeshi backgrounds faced a greater risk of unemployment than White people. And following the 2007-09 financial crisis, workers from Black African and Caribbean groups faced higher unemployment levels compared to White people.
The chart below, using data from the Labour Force Survey, shows that the after-effects of the 2007-09 financial crisis lasted longer for young people from ethnic minorities. Their unemployment rates did not experience a sustained fall until 2014, three years after White people. Given the long-term consequences of periods of unemployment for future employment and wages, such patterns are deeply worrying.
Unemployment rate among 16-24s
Since we know that downturns disproportionately affect young people from ethnic minority backgrounds, policymakers should be ready to act. Yet despite the mounting evidence that the same thing is happening again, there is little evidence that they are doing anything about it.
The Kickstart scheme launched in 2020, funds employers to create job placements for young people on universal credit. It shows that the government is alive to the risks of youth unemployment caused by the pandemic, but the scheme does nothing to acknowledge the ethnic dimension to the problem. We see the same failing in the recent government white paper on post-16 education and training, and the House of Lords report on the impact of COVID-19 on employment.
What can be done
The fundamental problem is that as an economy worsens, racial discrimination is likely to increase. As a result, the wage expectations and job prospects of ethnic minority workers suffer.
Tackling ethnic inequality has been a mainstream political goal since the Race Relations Act of 1976, and legislation already exists that explicitly monitors the effects of discrimination. The Equality Act 2010 brought in the Equality Duty, which requires all public bodies, including government departments, to consider “how the decisions that they make, and the services they deliver, affect people who share different protected characteristics”.
The concern is that in the current uncertain landscape the need for policies to be developed quickly is making these duties less of a priority. There is a need for everyone across the political spectrum and civil society to hold the government’s feet to the fire here – as new policies are proposed, ministers need to make explicit how, at the very least, they will not exacerbate existing labour market inequalities.
Indeed, they should go further. The 2017 McGregor-Smith review of race in the workplace noted that those from ethnic minority communities face “discrimination and bias at every stage of an individual’s career, and even before it begins”. The review highlighted the need to shine a light on racial differences and make the creation of an inclusive labour market part of business as usual: policy therefore needs an explicit focus on reducing ethnic inequality.
There is no shortage of research on the problem or guidance on how the government can help. A recent review identified 78 separate recommendations made by three different government-sponsored enquiries over nearly two decades. These include: mandatory unconscious bias and race awareness training; improved support for jobseekers; additional training and educational opportunities; setting recruitment and retention targets; diversifying decision-making bodies; publicising ethnic pay and employment gaps; and making leaders – in both government and non-government institutions – accountable for reducing ethnic gaps.
Action on the implementation of these recommendations has been patchy at best. Governments have not provided the consistent leadership required to keep the ethnicity agenda at the forefront of people’s minds. A clear focus both on the moral case for action and the practicalities of how to do it are needed to drive this agenda forward.
This is a crisis we have been able to see coming. Failing to anticipate the problem and react accordingly risks making increased ethnic inequality for young people one more damaging legacy of the pandemic.