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Two Million People Have Not Been At Work For At Least Six Months Of The Pandemic, Research Shows

The Resolution Foundation said by January almost two million people had been unemployed or furloughed for six months (PA)

4 min read

A new study by The Resolution Foundation into the job market during the pandemic has found almost two million people have not been able to work for six months.

The think-tank, whose work focuses on people with middle to low incomes, says their research highlights the scale of lasting damage to the UK’s labour force by Covid, that will need to be addressed by Rishi Sunak in the Budget.

The report, titled ‘Long Covid in the labour market’, found that by January 2021, around 700,000 workers had been unemployed for at least six months, and a further 500,000 had been fully furloughed for the same amount of time.

But as some people have moved between unemployment and full furlough in recent months, the total number who had been in a combination of both for at least six months was 1.9 million.

While the number of workers on the Job Retention Scheme in this lockdown is at 4.5 million, half of the 9 million peak during the first lockdown, the foundation said “the cumulative impact of a crisis that has lasted almost a year is causing the biggest challenges in the labour market”. 

The Resolution Foundation is calling on the Chancellor to set out a roadmap for phasing out furlough in a way that is “sensitive to public health restrictions and the sectoral nature of the crisis”.

The report calls for the full scheme to remain in place for several months after Covid restrictions have been lifted, and even longer in sectors still subject to legal restrictions like hospitality and leisure. 

It also wants Sunak to extend the Kickstart Scheme, introduce a wage subsidy scheme for hard-hit sectors, or raise the National Insurance threshold on new starters.

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

“And while the UK’s economic prospects are finally looking up, job insecurity remains high, particularly among those 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 out 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 bring back existing workers, while tax breaks on hiring could help more people to move jobs too.”Labour’s shadow Chancellor Anneliese Dodds also called for further action from the treasury to support people affected by pandemic unemployment.

“With the UK suffering the worst economic crisis of any major economy, it’s vital that the Chancellor acts before the Budget to protect jobs, secure our economy and get Britain back on the road to recovery," Dodds said. 

“Labour has called for a smart extension to the furlough scheme that includes training to help the long-term furloughed build new skills while they are unable to work.

“We’ve called for an overhaul of the Government’ failing Kickstart youth jobs scheme to help our young people back into employment, and we’re urging the Chancellor to bring forward £30billion in capital investment over the next 18 months to support the creation of 400,000 new jobs of the future.”

Christine Jardine MP, Liberal Democrat spokesperson for Treasury, said: "These figures show exactly why the Government needs to act decisively and the budget will tell us if they have the courage to do what it takes to rescue the economy. 

“We need bold and ambitious investment plans to create jobs, or else risk a lost generation which will hurt our country for decades to come.

"There can be no more games of wait and see with people’s lives. We need long-term plans for furlough and vital financial support for those who have already suffered too much in this pandemic."

A Treasury spokesperson said: “Throughout this crisis, we have done all we can to support jobs and livelihoods, spending over £280 billion in response to the pandemic.

"We’ve already extended our furlough scheme through to April so that people have certainty that help is in place.

“We will continue to invest in protecting and creating jobs through the remainder of the pandemic and through the recovery, and we will set out further details via the next stage of our Plan for Jobs at the upcoming Budget.”

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