New measures must be introduced to limit the rise in unemployment and cushion the income shock for those who will unavoidably lose jobs as the coronavirus pandemic escalates, the Resolution Foundation has argued.
The latest data from the Office for National Statistics (ONS) reveals UK employment was at a joint record high of 76.5% in November to January – before the coronavirus crisis struck.
Unemployment stood at just 3.9%, which was roughly the same as a year earlier.
The Resolution Foundation warned that the UK and many other economies are on course for a significant recession this year following the escalation of the coronavirus pandemic.
It said the government will need to take further action to support individuals that go far beyond measures announced in the Budget.
People working in retail, hospitality, entertainment and leisure are likely to be among the worst affected.
The Resolution Foundation said that for workers who need to self-isolate or take time off sick, the government should urgently extend statutory sick pay (SSP) to the two million low-paid workers who earn less than the £118 earnings threshold needed to qualify.
It argued this is essential as workers in low-paying jobs like cleaning, sales and security work, and caring and leisure are less likely to receive occupational sick pay (37% and 43% respectively) than those in professional occupations (63%).
However, it warned the income losses from wider economic damage of lost jobs and hours of work will eventually dwarf those from sickness itself. Government action must therefore go well beyond extending the reach and generosity of SSP, it argued.
The foundation said the government should immediately strengthen the safety net for those hit by the crisis, significantly uprating all working-age benefits – including Universal Credit – to help cushion the income shock for the many households who may find themselves receiving benefits for the foreseeable future.
Nye Cominetti, senior economist at the Resolution Foundation, said the absolute priority is much stronger action to cushion the living standards blow from a sharp economic shock.
“The shock to family incomes will go much broader than that driven by actual sickness itself, so the government should urgently build on welcome measures announced in last week’s Budget to support smaller firms, by ramping up the level of support for those losing or at risk of losing their jobs,” Cominetti added.
Amanda Mackenzie OBE, chief executive of Business in the Community, a charity and The Prince’s Responsible Business Network, urged businesses to bolster their duty of care towards employees.
“The threat from Covid-19 is an opportunity for businesses to show real character and a commitment to their staff that could prove invaluable in the long term,” she said. “Covid-19 is putting an unprecedented level of pressure on businesses of all sizes in every sector and a sharp rise in unemployment is inevitable in the weeks and months ahead.
“With events changing by the day, crystal clear communication and a basic duty of care towards employees will vastly improve their wellbeing, which is key.”
She said employers need to be aware of the toll Covid-19 will be taking on the mental health of staff, and make employees aware of mental health first aiders, employee assistance programmes and other help.