Eleven million could be furloughed or out of a job by the summer
As many as 8.3 million people will be furloughed under the government’s Coronavirus Job Retention Scheme, which launched today, according to estimates from The Resolution Foundation. This is far higher than the Treasury’s original estimate of three million.
As of 4pm today, more than 140,000 firms had applied for the scheme, the government said.
Meanwhile, unemployment is expected to rise sharply to 3.4 million by the summer, taking the total number of non-workers to 11.7 million.
The hospitality and retail sectors – two of the lowest paying sectors – are set to be hit hardest with ‘active’ employment falling by almost four million. The Resolution Foundation predicts 3.1 million employees in these sectors will be furloughed and an additional 800,000 employees will be made unemployed.
Almost four-in-ten of all furloughed employees could be from these two sectors alone, the think tank said.
The report said: “Employees in hospitality and retail are 50 per cent more likely to be furloughed than average.
“These are the two lowest-paying parts of the economy, with typical employee pay in 2019 in hospitality of just £231 a week (£8.20 an hour) and typical weekly pay in retail, wholesale and motor trades only £323 a week (£9.24 an hour). For comparison, typical pay across the whole economy is £455 a week (£12.16 an hour).
“Low pay is linked with lower levels of savings, and so this finding – that the lowest-paid sectors are some of the most affected by this crisis – brings home the importance of the Job Retention Scheme.”
What is the Coronavirus Job Retention Scheme?
The government’s Coronavirus Job Retention Scheme is an initiative to prevent mass lay offs during the lockdown. Employers can apply for a government grant to cover 80% of an employee’s pay, up to a monthly maximum of £2,500. These workers are furloughed, which means they remain on their company’s payroll but must not undertake any work for the business.
Chancellor Rishi Sunak said: “Our unprecedented job retention scheme will protect millions of jobs across the country and is now up and running.
“It’s vital that our economy gets up and running again as soon as it’s safe – and this scheme will allow that to happen.”
The scheme was originally set to last until 1 June, but the government last week extended it for another month until the end of June.
Read our guide on what it means to be furloughed here