Coronavirus and occupational switching: The future of employment

The coronavirus (COVID-19) pandemic has had a significant impact on the UK labour market so far. There has been interest in looking at how this has affected the flows between employment, unemployment, and inactivity, as well as the extent to which there has been any effect on labour market mismatch on those who have remained in employment.

This article explores the movements between occupations of those in employment that occurred in the labour market in the period covering the initial impacts of the COVID-19 pandemic (Quarter 1 (Jan to Mar) 2020 and Quarter 2 (Apr to June) 2020). We compare these figures with the same period a year ago (Quarter 1 2019 and Quarter 2 2019) as one way to look at how the pandemic might have affected these flows.

We specifically look at occupational inflows and outflows of those who have remained in employment in the pandemic, covering those who were aged 16 years and over and classed as employees and self-employed by the Labour Force Survey (LFS) in the two consecutive quarters.

Despite a marked fall in labour demand during the pandemic, the unemployment rate remained low, at 3.9%, in Quarter 2 2020. This is in part because of the Coronavirus Job Retention Scheme (CJRS) and the Self-Employment Income Support Scheme (SEISS) allowing workers to be temporarily away from work but remain in employment.

Analysis of labour market flows attributes this to a net flow into economic inactivity of 75,000 individuals between Quarter 1 (January to March) and Quarter 2 (April to June) 2020. This was the first net increase in economic inactivity since early 2013, driven by those moving out of unemployment. This likely reflects how lockdown has affected the ability and/or willingness of people who have lost their job to actively search for a new one, caused partially by personal health concerns. Employment status on the LFS is self-reported, with people classifying themselves as being either an employee or self-employed. The number of people who changed from reporting themselves as self-employed to an employee increased by 48,000 between Quarter 1 and Quarter 2 2020, and 81,000 on the year to a record high of 253,000. This may be partially attributed to workers seeking greater job security and stability as a result of uncertainty created during the pandemic.

Occupational switching can be defined as a change in a worker’s Standard Occupational Classification (SOC) from one quarter to the next, which would not be reflected in the traditional flows between employment, unemployment and inactivity. However, this can be of interest in helping to understand whether the pandemic might have led to an increase in mismatch in the labour market.

This analysis uses the LFS to classify occupation switchers as those who have changed one-digit SOC code between periods Quarter 1 and Quarter 2. When analysing at the major group structure, one-digit level, although broad, this compresses occupations that are similar in terms of qualification, training, skills and experience.

The ability of workers to switch between different occupations highlights the existence of transferrable skills and labour mobility. The Office for National Statistics (ONS) defines a job as an activity performed for an employer or customer by a worker in exchange for payment, whereas occupations are grouped according to skill level and skill specialisation. Therefore, not all job-to-job moves are considered an occupational switch as some workers may take on a different job within the same occupation.