UK’s low-paid workers take the brunt of virus jobs fallout

Bloomberg

Almost a quarter of jobs in the UK are at risk due to coronavirus, and those earning low incomes are the most vulnerable, according to McKinsey.
About 7.6 million workers are exposed to a reduction in hours, being furloughed or permanent layoffs during lockdown, the analysis published on Tuesday found. Nearly half those jobs are in occupations earning less than 10 pounds ($12.36) an hour — below the target rate for the national minimum wage.
The report is another reminder of how the virus is having a disproportionate effect on the most vulnerable in society, after statistics Monday showed low-skilled men were most at risk from the disease. The analysis may also add pressure on Chancellor of the Exchequer Rishi Sunak to extend programs that are helping workers who have lost incomes.
“We are looking at a crisis which inevitably will increase inequalities, unless we can mitigate those impacts,” Tera Allas, director of economics and research at McKinsey, said on a video call with reporters. “This is a health crisis, the economic implications of which are enormous, and what we’re seeing now is that there’s a risk of a significant increase in inequality.”
The government is currently paying the wages of furloughed workers, in an effort to stop the coronavirus crisis creating mass unemployment. Officials are considering gradually tapering support to avoid a cliff edge when the current program ends on June 30. Sunak is due to provide an update on Tuesday.
Ministers should extend the scheme until early August and have it exist in some form until the end of September as lockdown restrictions are lifted, the Resolution Foundation urged in a separate report.
As the UK starts to lift some lockdown measures that have been in place since March, attention is turning to whether workers will be protected and what changes to the economy might end up being permanent.
The government should return to its “levelling up” agenda to help left-behind areas, according to McKinsey, which found that a greater proportion of jobs are at risk in the lowest-income areas including Blackpool, Stoke-on-Trent and Torbay.
Retraining and re-skilling of unemployed people needs to be boosted, McKinsey said. The structure of the economy will likely change significantly and workers should be prepared for broader trends in automation and digitization — something the UK had been struggling with even before the pandemic.
While workers in grocery and online retail have been in high demand, the retail and wholesale sector still has the largest number of jobs at risk due to store closures, the McKinsey
report concluded.
A report by Legal and General underscored the impact the lockdown is having on consumer spending, the engine of the British economy. While households are spending more on groceries, entertainment and arts and crafts, expenditure overall has fallen by 31% per person.