Ending of Covid support hikes unemployment levels

Younger employees and BAME workers are likely to be hardest hit when the government’s coronavirus job retention scheme (CJRS) winds down at the end of this month, according to research from the Resolution Foundation which warns youth unemployment could reach its highest level for four decades

The think tank’s survey of over 6,000 adults found around one-in-five young people and over one-in-five BAME workers who were furloughed during lockdown have since their lost jobs, while only one-in-three young people have been able to find new work.

Of all the workers surveyed workers who have been furloughed during the crisis, around half have returned to work in full, one-in-three are still fully or partially furloughed, and 9% have lost their jobs altogether.

The post-furloughing fall into unemployment has been most common among 18-24-year olds (19%), BAME workers (22%) and those previously working on insecure contracts (22%).

The Foundation calculates that the scale of unemployment identified in its survey implies an unemployment of 7% in September – well above the latest official figures of 4.5% in the three months to August – rising to 20% among 18-24 year olds.

The report notes that fewer than half (43%) of those who have lost their jobs since March had found new work by September, falling to just 33% among young people, and 36% of people in hard-hit sectors like hospitality, leisure and non-food retail.

The Foundation says that there is little sign that workers exiting these struggling sectors are flowing into areas of the labour market that are able to grow during this pandemic.

Instead, the research found people are more likely to look for vacancies in the leisure sector (21%), which had the fewest listed vacancies of all major industry groups in recent months, compared to areas with the most listed vacancies, such as social care where 17% looked for vacancies.

The Foundation says this suggests the UK is unlikely to see a swift reallocation of labour, with high unemployment levels continuing for some time to come.

It also warns that unemployment may become more widespread, saying more than a quarter (28%) of respondents of all age groups  in work in September are worried about redundancies occurring, have been told a redundancy process either may or will happen, or have been told they will be made redundant.

Kathleen Henehan, senior research and policy analyst at the Resolution Foundation, said: ‘The first eight months of the Covid crisis have been marked by an almighty economic shock and unprecedented support that has cushioned the impact in terms of people’s livelihoods.

‘But the true nature of Britain’s jobs crisis is starting to reveal itself. Around one-in-five young people, and over one-in-five BAME workers, have fallen straight from furloughing into unemployment.

‘Worryingly, fewer than half of those who have lost their jobs during the pandemic have been able to find work since. This suggests that even if the public health crisis recedes in a few months’ time, Britain’s jobs crisis will be with us for far longer.’

Further reading:

Jobs, jobs, jobs report, Evaluating the effects of the current economic crisis on the UK labour market

Pat Sweet |Reporter, Accountancy Daily [2010-2021]

Pat Sweet was the former online reporter at Accountancy Daily and contributor to the monthly Accountancy magazine, pub...

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