News ID: 276306
Published: 0729 GMT November 04, 2020

New UK lockdown, same economic victims: Young, low-paid workers

New UK lockdown, same economic victims: Young, low-paid workers
JASON CAIRNDUFF/REUTERS

By Larry Elliott

As far as the labor market is concerned, lockdown 2 will be the same as lockdown 1: The main casualties will be young, low-paid workers employed by consumer-facing services.

Retailing, hospitality and leisure make up around one-sixth of the economy’s output and anybody working in one of those sectors is more at risk of losing their job, of being furloughed and of not having their government-supported wages topped up by their employers.

The latest survey of earnings and hours worked from the Office for National Statistics illustrates starkly why so many of Britain’s most vulnerable workers are fearful of a second lockdown, particularly if the restrictions drag on for more than a month.

While 11% of all employees were furloughed on reduced pay in April – the month that registered the biggest contraction in the economy – that figure rose to 39% for those working in accommodation and food services.

What’s more, around half of the lowest-paid workers (paid £8.72 an hour or less) were furloughed on reduced pay – compared with fewer than one in 20 higher-paid workers (paid £15.87 an hour or more).

So while the government’s furlough scheme paid 80% of wages up to a maximum of £2,500 a month, and was at least as generous as most comparable schemes in other countries, there was still a major income hit for those workers whose employers could not afford to make good the other 20%. As a result, around 2 million furloughed workers were being paid less than the £8.72 an hour minimum wage.

Clearly, a low-paid worker furloughed on 80% of their wages is a lot better off than someone who loses their job altogether, but life is still going to be a struggle. Older, higher-paid workers might have savings that they can draw upon, but the 21-year-old earning the minimum wage in a hotel is unlikely to have this option.

The TUC (Trades Union Congress) has said [Chancellor of the Exchequer] Rishi Sunak should fix the furlough scheme to ensure that nobody ends up earning less than the minimum wage. Given the Treasury’s reluctance to target particular sectors, it is highly improbable that the chancellor will go down this road.

Sunak could, however, announce that he intends to increase welfare payments when they are next uprated in April, rather than take away the temporary £20-a-week one-year boost to universal credit, which is the current default position for the government. 

 

Source: The Guardian

   
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