Low-paid UK workers at higher risk of losing jobs with end of furlough scheme

The government’s furlough scheme was implemented to avert millions of job losses after being forced to close the economy down due to the coronavirus pandemic. Nevertheless, some jobs were expected to no longer be viable even when the scheme was wrapped up on 30 September.

Lower-paid workers were likely to get hit the hardest by the expected increase in unemployment. Retail, hospitality and leisure were the biggest low-pay sectors to have applied for the scheme en masse and were only slowly returning to normality as the economy reopened.

In its Low Pay Britain 2021 report, the Resolution Foundation said that low paid workers continued to bear the brunt of the crisis.

As of March 2021, more than one-in-five (21%) workers in the bottom weekly pay quintile had either lost their job or lost hours and pay due to the crisis, or were furloughed, compared to less than one-in-ten (7%) of those in the top earnings quintile.

Most workers leaving furlough were returning to their previous job but those in the bottom half of the pay distribution were more likely to still be furloughed due to the slower pace of opening in lower-paying sectors such as hospitality and leisure.

The foundation 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.”