Town Hall assesses pandemic’s impact on local economy as unemployment rate soars

Islington Council’s economy chief is assessing the impact of the coronavirus crisis and lockdown, with figures being presented to councillors this week showing the borough’s unemployment rate had risen from three per cent of the workforce in March to 7.3 per cent in October.

A report from Cllr Asima Shaikh reveals the areas of Islington which are considered “highly vulnerable” to the economic shock of lockdown due to their business profiles, including Old Street, Angel and Holloway Nag’s Head.

The report also notes that the borough’s unemployment rate, while having risen alarmingly quickly is lower than the London average, with neighbouring boroughs’ rates sitting at closer to 10 per cent. Shaikh’s report puts this down to tech and knowledge workers being less affected, pointing to Camden which co-hosts the so-called Knowledge Quarter also experiencing a lower rate than other places at 5.8 per cent.

Shaikh’s report, which will be presented to councillors tomorrow, reads: “After the Covid-19 pandemic lockdown…it became clear that the initial sectors most affected by Covid-19 were those in which workers needed to be in physical proximity at their place of work and were not classed as ‘key workers’. Lockdown effectively ‘switched off’ the demand for their services and some have still not fully recovered from the shock.

“In Islington these initially hardest hit sectors were predominantly, but not exclusively, classed under ‘Accommodation and Food Services’ (A&FS), including hotels, short-stay apartments, student residences including on-site services, and restaurants, cafés, takeaways, catering services, licensed clubs, pubs and bars, and ‘Arts, Entertainment & Recreation (AE&R), including performing arts, artistic creation, concert and theatre halls, libraries, archives, museums and other cultural activities, betting shops, sports, amusement and recreation activities; together accounting for approximately 25,000 jobs in the borough.

“As the effects of the pandemic have continued, businesses that rely upon demand for their services from commuters, business travellers and tourists are finding it harder to survive.”

The Town Hall is now looking ahead to how it can support local workers, with Shaikh suggesting four strategic themes, including the prioritisation of policies that support health and incomes of those most heavily impacted, helping people to retrain, finding more work for locals within the council and supporting local business.

However, the council report makes clear that the crisis has highlighted already-existing problems with the borough’s economy, underlining the scale of the challenge ahead.

Before the pandemic hit, a “significant minority” of Islington worked in low-paid, insecure jobs, according to Shaikh, with the borough suffering from a lack of skilled and secure positions leading experts to describe the local labour market as an “hourglass” economy owing to its high rate of pay inequality.

Shaikh’s report notes the large numbers of small and micro businesses in Islington, many of whom were “already pessimistic about their long-term viability,” with such businesses disproportionately owned by women and people from Black, Asian and minority ethnic (BAME) communities.

The areas in Islington judged “highly vulnerable” due to their business profiles include Old Street, St Luke’s and Clerkenwell, which have over twice the number of AE&R and AF&R businesses of any other local area. Clerkenwell in particular hosts a “globally significant” cluster of creative businesses, the report points out, with many of those staff now working from home, taking its toll on the local economy.

The report goes on to single out Angel and the hit to its night-time economy which had relied on commuters and tourists, Nag’s Head retail businesses, which employ over a quarter of the local workforce.

Youth unemployment also sits at 6.6 per cent, which is a rise of 14 per cent from May.

The report does point towards some “early signs of recovery”, with demand in the construction industry said to have risen to nearly its pre-March level with “large numbers” of workers coming back from furlough. Job vacancies in August also exceeded pre-pandemic levels locally in sectors such as logistics, manufacturing, domestic help and cleaning.