High wage areas saw largest job losses during pandemic, research finds

The Covid crisis could have a ‘long-lasting’ impact on the geography of jobs, experts warn

Areas of the country with higher average wages have seen significantly larger job losses than lower wage areas, research has found. However, it is still lower-paid workers that are bearing the brunt of these losses.

A report by the Resolution Foundation and London School of Economics found that since February 2020, some of the largest falls in employment have been seen in parts of the country where wages are highest.

Westminster, the UK’s highest-wage area, saw jobs fall by 3.6 per cent in June this year. Similarly, Edinburgh and Aberdeen, both high-wage areas, saw job falls of 2.2 per cent and 3.5 per cent respectively.

In contrast, Leicester, the UK’s lowest-wage area, saw employment increase by 1 per cent.

However, the report said this geographic trend comes despite previous Resolution Foundation research showing lower-wage workers have been worst affected by the impact of the pandemic on the labour market.

This suggested it was also low-paid workers that have experienced the bulk of the job losses in these high-wage areas, the report said.

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“Low-paid workers have borne the brunt of the labour market impact of the pandemic,” said Charlie McCurdy, economist at the Resolution Foundation. “Those same workers in high-wage areas of the UK appear to have been hit hardest during the recovery, with those places experiencing significantly higher job falls than low-wage areas.”

The report also found that places hard hit in the beginning of the pandemic had seen varied recovery rates, with commuter areas seeing a slower recovery than tourist areas.

In February 2021, the two highest furlough rates were in South Lakeland, Cumbria, (26 per cent) and the London Borough of Newham (23 per cent). By June 2021, furlough rates dropped to 7 per cent in South Lakeland but only to 11 per cent in Newham.

McCurdy explained that in the early part of the crisis city centres and coastal areas, which are both dependent economically on people coming in from outside the area, were particularly hard hit.

But, while England’s reopening in June saw jobs in tourism-reliant areas “bounce back”, cities are still struggling.

“The summer ‘staycationing’ boom has brought a much-needed boost to many, but a structural shift towards more home-working could have a lasting impact on the geography of the UK labour market, further hindering the living standards recovery for Britain’s low-paid workers,” said McCurdy.

However, these changes in the labour market could be beneficial for firms still facing recruitment troubles, said Sheila Attwood, managing editor of pay and HR practice at XpertHR.

“By adopting hybrid or home working policies, their reach increases dramatically with the potential to take advantage of a much wider pool of candidates,” she said.

“All indications suggest that a return to the office full-time is unlikely, but we just don’t know yet the extent to which people will start to trickle back over the next few years. For now, the labour market has changed, but I think there is more change to come.”

McCurdy added that the reluctance of many UK workers to commute as much as they did before the crisis could have a ‘long-lasting’ impact on the geography of jobs.

“Over the pandemic we’ve seen a rapid increase in adverts for home- or hybrid-working jobs. Employer decisions on home working will create new opportunities for some people, but new challenges for some local labour markets too,” he said.