The COVID-19 pandemic, an unprecedented shock to the global economy, has profoundly affected every aspect of people’s lives. Analysing the impact of the pandemic on unemployment in East Midlands, we find that an increase in the number of infections leads to higher claimant counts. The impact of the pandemic also rises with the deprivation index. It is the deprivation of health, not income nor employment that drives the result.
The development of COVID-19 in the East Midlands
The first cases of COVID-19 in the East Midlands were reported in Gedling and Nottingham in February 2020, and not long after that, the coronavirus has quickly spread to all areas. The slight growth in the number of infected people in the first 6 months was followed by a dramatic increase in the subsequent 3 months.
COVID-19 infections had reached a peak in January 2021 before declining noticeably. By April 2021, there have been approximately 330 thousand confirmed cases of coronavirus in the East Midlands. Leicester took the lead with approximately 36 thousand confirmed cases, followed by Nottingham with 30 thousand cases. Derby came next with 20 thousand infections.
This pandemic has a significant impact on job loss in the regions
Our analysis using data of 33 local authority districts (LAD) in the East Midlands has revealed how the COVID-19 pandemic affected unemployment during the period from March 2020 to December 2020. There are two ways of measuring unemployment. The first measure is the estimated proportion of unemployed people in the labour force, taken from monthly Labour Force Survey. Around 40,000 households are selected in each wave. The second measure is the claimant count, which is the number of people receiving the Job Seekers Allowance.
Examining the relationship between the number of monthly COVID-19 cases and the claimant counts, the results of our study show that counties with a high number of infections are badly hit economically. In particular, doubling the number of cases would lead to a 4 percent increase in the number of claimants. For instance, the ratio of the monthly number of cases between Rutland (the least infected region) and Leicester is 30 times (269 vs. 8464). At the same time, the claimant counts in Leicester is more than 7 times that in Rutland (15687 vs. 2193).
Deprivation of Health, not of Income nor of Employment is the main cause of Covid-19 spread
Since the 1970s, the Ministry of Housing, Communities and Local Government and its predecessors have provided local measures of deprivation in the UK. Deprivation is a wider measure than poverty. Indeed, a person is regarded as deprived if he(she) lacks any kid of resources, not just income (as in poverty). The Index of Multiple Deprivation (IMD) is the official measure of relative deprivation, which is based on the combination of seven distinct domains: Income Deprivation; Employment Deprivation; Health Deprivation and Disability; Education, Skills and Training Deprivation; Crime; Barriers to Housing and Services; and Living Environment Deprivation.
According to the latest IMD scores in 2019, the situation in the East Midlands is worrying. The deprivation score in the city unitary authorities is higher than non – metropolitan districts.
The most deprived local authority district (LAD) within East Midlands is Nottingham. It is ranked 11th out of 317 LADs in England in terms of the Average Score. The next is Leicester which features in the 40 most deprived parts of the country. They are also the cities with the highest number of COVID-19 cases in the East Midlands. The least deprived LAD is Rushcliffe, ranked 314th out of 317.
Among the seven domains used to construct IMD, income and employment deprivation are the most important ones. Nearly half of the deprived population are either of low income or excluded involuntarily from the labour market. Nottingham is the most income deprived while East Lindsey is the most employment deprived. South Northamptonshire is ranked as the least deprived on both these two domains in the East Midlands.
Health Deprivation is also an important aspect of deprivation as it only ranks below the two domains mentioned above. The most health-deprived communities in the East Midlands are concentrated in the north of the region, for instance, Chesterfield, Nottingham and Mansfield. The least health-deprived areas are made up of districts in the south such as Rushcliffe, Harborough and Rutland.
Our hypothesis is that the region with a high level of deprivation would suffer the most. This is confirmed by our data. Indeed, increasing the IMD by 10 points would add another 3 percent rise in the claimant counts when the number of cases doubles.
To further understand the impact of deprivation, we turn into the domains of deprivation. More precisely, we replace the IMD by its most important domains, namely Income, Employment and Health. They are also more likely to be relevant to unemployment than the other domains such as Crimes, Barriers to Housing and Services or Living Environments.
It is notable that neither income deprivation nor employment deprivation could explain why the pandemic hit the regions economically. Meanwhile, health deprivation might be considered as the cause of the rise in the number of claimants. For instance, Chesterfield has relatively lower infections than Rushcliffe with 633 cases per month compared to 776 cases per month in Rushcliffe. But while the former is the most health deprived area in East Midlands, the latter is the least health deprived area. As a result, Chesterfield recorded more job loss than Rushcliffe. There were 3481 claimants per month in Chesterfield, compared to 2193 claimants per month in Rushcliffe.
In conclusion, differences in health deprivation lead to different impacts of the COVID-19 pandemic on unemployment. In order to reduce infections as well as minimize negative impacts of the pandemic, policymakers should pay attention to the most health-deprived areas and implement appropriate measures to improve healthcare conditions in these areas.
