Low-paid workers face the highest risk of losing their jobs when the UK government’s furlough scheme ends in September, according to analysis by a leading thinktank.
The government’s coronavirus job retention scheme, which pays 80% of furloughed workers’ wages, is widely believed to have prevented millions of job losses when the economy collapsed but economists are concerned that some jobs will still not be viable when it ends on 30 September.
The expected increase in unemployment is likely to hit lower-paid workers hardest, in line with the experience of the financial crisis more than a decade ago, according to an annual assessment by the Resolution Foundation on the prospects for workers on low incomes.
It said that by March the lowest-paid fifth of workers were three times more likely to have lost their job, been furloughed or lost income when compared with the top fifth. Twenty-one per cent of lower-paid workers had lost out, compared with only 7% of the highest paid.
There were still 3.4m furloughed jobs at 30 April, according to the latest available government data. That was lower than the most recent peak of 5.1m jobs in January, and many more workers are likely to have restarted work since the lockdown easing began. Retail, hospitality and leisure are the biggest low-pay sectors, and they accounted for the majority of people returning to work in April.
The foundation noted that prospects for those on low incomes had improved markedly since last year when the pandemic caused economic chaos, particularly in low-pay sectors. Unemployment has fallen back to 4.9%, and some sectors are reporting difficulties hiring workers. Private sector economists have scaled back their expectations for unemployment at the end of the year, from 6.3% to 5.9%, according to forecasts collated by the Treasury.
However, the foundation said the government must not assume that rising minimum wages and the economy reopening will be sufficient to improve the lot of the lowest paid. It called for faster minimum wage increases and new rights to a regular contract, and more notice ahead of shift changes for those on zero-hours contracts.
Nye Cominetti, a senior economist at the Resolution Foundation, said: “Low-paid workers have been at the heart of the economic crisis. Fortunately, low-paid workers also look set to be at the heart of the recovery by coming off furlough in huge numbers and returning to their previous jobs.
“However, big risks still lie ahead. Low-paid workers are most at risk from the expected rise in unemployment later this year, which also risks causing greater job insecurity.”