Over-55s more likely to be left on furlough, says think tank

As the government starts scaling back support through job retention scheme, report warns older workers are at higher risk of unemployment

Over-55s more likely to be left on furlough, says think tank

Workers over the age of 55 are more likely than their younger colleagues to be left on furlough, a think tank has warned, warning that these workers are at higher risk of unemployment as the government starts to roll back its support.

In a report, the Resolution Foundation found more than a quarter (26 per cent) of workers aged 55 to 64 who were fully furloughed during the most recent lockdown remained so in May, despite the relaxation of restrictions on businesses.

In contrast, the economy as a whole has seen a rapid return to work, with less than one in five workers who were furloughed in February still on furlough in May, including just 6 per cent of those aged 35 to 44 and 16 per cent of those aged 18 to 34.

Across the economy, four out of five workers furloughed in February were back in work in May, with the reopening of the hospitality and leisure sectors – which are predominantly staffed by younger workers – attributed to the increase.

In contrast, the report said around half of all workers on furlough in May were aged 45 and over.

While acknowledging that younger workers have borne the brunt of the economic fallout from the pandemic, the foundation has warned that as the government starts to phase out the furlough scheme, older workers now faced a higher risk of unemployment than those of other ages.

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Daniel Tomlinson, senior economist at the Resolution Foundation, said that while it was encouraging to see so many people – and particularly younger workers – return to work since restrictions began to relax, there were still 2.4 million on the furlough scheme at the end of May.

“Today’s figures offer a sobering reminder of just how incomplete our Covid recovery is,” he said.

“With the furlough scheme starting to be phased out today, the government must do all it can to prevent a big rise in unemployment this autumn – particularly for those who have spent long periods not working during the pandemic.”

From today, the government has dropped its contribution to furloughed employees’ wages to 70 per cent, and employers are now expected to contribute at least 10 per cent of furloughed staff’s wages for the time they are not working, on top of the National Insurance and pensions contributions they are already paying.

As the scheme continues to be rolled back, government contributions will drop again in August to 60 per cent, with employer contributions increasing to 20 per cent, and will stay at this level until the scheme closes completely on 30 September.

According to analysis from the Institute for Fiscal Studies, the impact of the changes will mean that the cost of keeping an employee previously earning £20,000 a year on furlough rose from £155 a month in June to £322 a month starting from today. This will increase to £489 per month in August when the rules change again.