Covid-19 – A third of Scottish workforce to be furloughed or unemployed


Covid-19 – A third of Scottish workforce to be furloughed or unemployed


New research from the Institute for Public Policy Research has revealed that a third of working Scots will lose their jobs or be furloughed by the end of June. The study has come out just as it has been confirmed by the UK Treasury that the coronavirus job retention scheme will wind down.

The IPPR study suggests that as many as 150,000 jobs could be lost as a direct result of the coronavirus pandemic, and 750,000 Scottish employees are expected to be on furlough.

Titled “Covid-19: What’s the outlook for Scotland’s workforce?”, the IPPR study assesses the scale of the economic impact of the pandemic, as well as those who will be most affected.

Job losses across key sectors

Delving into the numbers behind some of Scotland’s key employment sectors, the study warns that, “These job impacts will not be evenly spread across Scotland as different sectors face very different prospects.”

  • The worst affected areas for job losses have been revealed as the wholesale, retail and motor trades, with an expected 31,000 jobs lost and a forecasted 142,000 Scottish workers in this sector furloughed.
  • The accommodation and food services segment (hospitality and tourism) follows closely behind, with an anticipated 31,000 job losses and 140,000 workers placed on furlough.
  • Both manufacturing and construction were revealed to be next hardest hit on job losses, with over 80,000 workers furloughed and around 20,000 job losses in each segment.

On the other hand, the public and healthcare sectors show the least negative impact from the effects of coronavirus on employment levels, with zero job losses and an estimated new 14,000 new jobs created in the healthcare sector.

Lowest paid, hardest hit

When looking at the overall impact of furlough and job losses, the hospitality sector has seen the highest percentage of its workers – 83% in total – experiencing job losses and furlough.

  • The study suggest that this is particularly alarming because of the already unreliable working hours and low pay in this sector, with over 60% of workers in hospitality on less than two-thirds of the median weekly pay in Scotland.
  • The IPPS also highlighted analysis from the Fraser of Allander Institute that demonstrated the majority of those working in the hospitality sector are single adults who live on their own, leaving them vulnerable to financial turmoil as the only member of a household to pay the bills, without the buffer of another earner.
  • Adding further concern is that it’s been highlighted in a previous IPPR survey that those who are working in these sectors were already likely to be struggling with their finances before the economic impact of Covid-19, with one in three hospitality workers, and 29% in retail, wholesale and the motor-trades “just about getting by”.

At the other end of the spectrum, besides the public and health sectors, the study noted that the financial and insurance sectors were relatively protected from the worst affects of the crisis, concluding, “This exposes a pattern across Scotland and the UK economy: workers with greater security and higher earnings are relatively insulated from the economic effects of this crisis, while the most precarious are likely to experience intensifying financial insecurity.”

The report concludes by warning that “a significant proportion of workers currently furloughed may face redundancy.”

Chancellor set to outline the end of furlough

The gloomy news coincides with confirmation from Chancellor Rishi Sunak this week that furlough will indeed wind down in July. It’s expected that more clarity will come from the Treasury before mid-May on exactly how this will be achieved.

However, Sunak has offered some reassurance that at least the scheme will not end abruptly. The Chancellor told ITV News on Monday that, “There will be no cliff edge to the furlough scheme. I am working to figure out the most effective way to wind down the scheme and ease people back into work in a measured way.”

Similarly, Health Secretary Matt Hancock told Sky News that the government must “wean off” businesses from the scheme “as the economy gets back on its feet”, suggesting that any approach to ending furlough would be gradual.

Over 6.3 million people in the UK currently rely on the coronavirus job retention scheme to have up to 80% of their salaries subsidised, at an estimated cost of £8 billion to the UK economy. The scheme was initially proposed to run for a three-month period from March to May 2020, but has been extended until 30th June.

Reports have suggested that the amount being subsidised by the Treasury could drop from 80% to 60%, or the £2,500 monthly cap on the scheme may be lowered as an the interim, but no official announcement has been made yet by the government.

Tej Parikh, chief economist at the IoD, commented: “Getting the economy running again won’t be like flicking a switch. Even if lockdown measures were completely lifted, many firms wouldn’t expect demand to lift to normal levels immediately.”

It follows some alarming commentary this week that redundancy levels could rise rapidly if the government doesn’t adapt to the new normal. Alan Lockey, head of the Future of Work Centre at the Royal Society for the encouragement of Arts, Manufactures and Commerce (RSA), stated that if the estimated 27% of the population currently on furlough became redundant, unemployment “would rocket to levels not seen since the Great Depression.”

If you’re concerned about debt because you’ve been furloughed or made redundant, we can help. The professional debt experts at Carrington Dean are here to listen, understand and offer free advice on your debt situation at this worrying time. Get in touch today on 0808 2234 102 to start dealing with your debt.

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