Almost two million workers were unemployed or furloughed in January and had been for at least six months, according to new research revealing the scale of damage to the UK’s labour force caused by the pandemic.
The Resolution Foundation’s Long Covid in the labour market report found that around 700,000 UK workers had been unemployed and a further 500,000 had been fully furloughed for at least six months by January 2021.
When including those who had moved between full furlough and unemployment, the total number of people who had not worked for at least six months to January increased to 1.9 million.
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The report was based on independent analysis of YouGov data on more than 6,000 18-65 year olds and an online survey conducted in collaboration with the Health Foundation.
Nye Cominetti, senior economist at the Resolution Foundation, said the findings showed that job insecurity remained high despite the improvement in the UK’s economic prospects – particularly among those who have spent long periods not working or who are currently furloughed.
She added that workers on long-term furlough still faced the same challenges as those who are unemployed, such as loss of skills and missed earnings growth, despite receiving greater financial support and having an easier route back into work.
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Cominetti called on chancellor Rishi Sunak to use the Budget statement next month to set out a roadmap for phasing out the furlough scheme gradually and in a way that acknowledged that some sectors, including hospitality, had a higher risk than others of rising unemployment.
She said: “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.”
Earlier this week the Institute for Fiscal Studies also called for a gradual phasing out of the furlough scheme. Paul Johnson, director of the IFS, said a significant continuation of the furlough scheme, while necessary, needed to be limited and tightly targeted, striking “a balance between continuing support for jobs and businesses harmed by lockdowns and weaning the economy off blanket support that will impede necessary economic adjustment”.
The Resolution Foundation similarly urged the chancellor to respond to the long-term risks of Covid in the labour market by setting out a roadmap for phasing out the furlough scheme that was “sensitive to public health restrictions and the sectoral nature of the crisis”.