Impacts of COVID-19
3.1 The severity of the pandemic has required an unprecedented public health response, with large sections of our economy either ceasing or significantly reducing activity. The immediate consequences of this disruption can be seen in the large numbers of workers placed on furlough, increased numbers claiming unemployment support, and businesses struggling with cash flow and being forced to take on new debt. In the face of this we have seen unprecedented interventions in the economy from both Scottish and UK Governments to limit job losses and support businesses and third sector organisations through the crisis. At the local level, many communities, often led by local anchor organisations, have rallied together as vulnerable people were required to stay at home and the pandemic shut down social infrastructure such as libraries and community halls.
3.2 The impacts of the pandemic cannot be understood by simply looking at economic aggregates such as GDP. We must not forget the impact this has had on people’s wellbeing. Emerging evidence shows the impact lockdown and social distancing has had on mental health, and serious concerns have also been raised for victims of domestic abuse. Evidence from other parts of the UK has shown the virus has had a disproportionate impacts on Black and Minority Ethnic (BAME) workers.
3.3 Our labour market was not working for everyone pre-crisis. On this, we could point to the significant numbers still experiencing underemployment, or the almost 70,000 working under zero hours contracts. The principles of Fair Work, a pillar of Scottish Government Economic Strategy, are not experienced equally across society. One pre-crisis survey found that almost a fifth of respondents felt they had no effective voice at their place of work.
3.4 The lockdown has heightened our awareness of these features of the labour market. Early evidence has shown low earners and those experiencing precarious work have been more likely to either lose their jobs or to be furloughed. Recent Scottish Government research has also highlighted that low earners, younger people, women, minority ethnic individuals, and disabled people are most at risk as the labour market is disrupted.
3.5 For those able to stay in work, businesses and individuals have been forced to adapt to new ways of working at a pace previously unseen. However, the shift towards home working has not been uniform, being more common among higher earners. While this will have been viewed as a positive by some, the rapid shift to homeworking has also created new concerns, with the potential for fundamental changes to working conditions being established with limited opportunity for employee consultation and involvement. Many workers on lower incomes have been required to continue travelling to their place of work. While there have been good examples of employer-employee engagement on health and safety matters, there has also been cases of employers not giving due attention to the concerns of their staff.
3.6 We now need look to across the horizon to what may follow later in the year. There have been warnings of large scale redundancies as the economy reopens and the UK Government furlough scheme is run down. For many workers, including those in previously high-quality employment such as in aviation, we have already seen those threats translated into redundancies or attempts to remove hard-won employment terms. Weak job creation will also greatly impact the labour market, and has been shown to be the dominant factor in explaining rises in unemployment during past recessions. This has prompted estimates that unemployment could reach as high as 10% later this year, with the impact likely to fall on those already disadvantaged.
3.7 The other impact of the lockdown has of course been the reductions in greenhouse gas emissions that have occurred. The disruption has meant a rapid transition to using less energy, travelling less, with output from heavy industry also curtailed. One study has estimated that global emissions may fall between 2-7% in 2020, with daily emissions estimated to have fallen by as much as 31% in the UK during lockdown. Data from road side monitoring has also shown significant improvements to air quality in streets across Scotland.
3.8 While we have seen a step-change in people’s behaviours through lockdown, many of the changes seen, such as reduced car travel, look as if they are starting to return to previous levels. In any case, ultimately it is the long-term trajectory of emissions that matter for climate change. As we have pointed out, based on the most recent figures, Scotland was not on a trajectory to meet net-zero by 2045 prior to the pandemic.