Almost 2 million workers haven't worked for at least six months of Covid crisis

 Almost 2 million workers haven't worked for at least six months of Covid crisis

Almost two million workers were unemployed or fully furloughed in January – coupled with been for at least six months – highlighting the size of lasting damage to the UK’s labour force which will need to be addressed in the Budget, based on new research published by the Resolution Foundation.

Long Covid within the labour market – supported by the Health Foundation – examines your the labour market throughout the current lockdown, the cumulative impact of the longer than expected crisis so far, and workers’ prospects for the months ahead as the economy starts to recover.

The report finds that the number of workers on the Job Retention Scheme (JRS) has risen to around 4.5 million throughout the current lockdown – half the 9 million peak throughout the first lockdown – showing that its effect on the labour market continues to be far less severe as firms have adapted to operating with the pandemic.

Instead, the cumulative impact of a crisis that has lasted several months is causing the biggest challenges within the labour market. While all recessions result in a rise in long-term unemployment, this crisis poses new challenges by means of long-term furlough.

The report finds that around 700,000 workers had been unemployed for at least six months in January, while an additional 500,000 workers have been fully furloughed (not working any hours) for your many months. Because some people have moved between unemployment and full furlough in recent months, the total number who were unemployed or fully furloughed in January, coupled with been so for at least six months, was 1.9 million.

The Foundation says that while those on long-term furlough have had much better financial support, and have a simpler route back into work (through their current employer), compared to those who have lost their jobs, they face most of the same challenges in terms of a loss of revenue of skills and missing out on earnings growth.

The report implies that while the outlook for the economy has improved, many workers remain concerned about their own job prospects.

Around 8 percent of workers currently employed either expect to lose their jobs within the next three months, or have been told they would be made redundant. This figure rises to 21 per cent among those who have been furloughed for at least 6 months of the crisis.

The Foundation says the Chancellor should respond to the risk of long Covid in the labour market by setting out his own roadmap for phasing out the JRS that is sensitive to public health restrictions and also the sectoral nature of the crisis.

The report calls for the full JRS to remain in place for many months after public health restrictions have been lifted to give firms time for you to bring staff back, and remain in place for longer in sectors still susceptible to legal restrictions, such as hospitality and leisure. The JRS should then be eliminated by gradually, increasing the minimum hours required of workers to ensure that support to be provided.

The Chancellor must also ensure support for the long-term unemployed is delivered by extending the Kickstart Scheme into the coming year, the Foundation says, and that long periods of furlough are taken into account when it comes to deciding which workers access extra to work support via the Restart Scheme.

Finally, the Chancellor can encourage wider job creation by introducing a wage subsidy scheme targeted at maximising employment in hard-hit sectors, or raising the nation's Insurance threshold on new starters, and investing directly in new jobs in areas such as social care, the Foundation says.

Nye Cominetti, Senior Economist at the Resolution Foundation, said: “Ten months in to the crisis, almost two million people have now been affected by long Covid within the labour market, having not worked for at least six months.

“And while the UK’s economic prospects are finally searching for, job insecurity remains high, particularly the type of who have spent long periods not working, or who are currently furloughed.

“The Chancellor must use his Budget to set out his own roadmap for phasing the furlough scheme gradually and in a way that acknowledges where the risks of rising unemployment are highest – in sectors like hospitality.

“This would keep a lid on rising unemployment and encourage firms to recover existing workers, while regulations on hiring could help more and more people to move jobs too.”

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