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Middle-aged morass: older workers stuck on furlough

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Older workers are more at risk of redundancy than younger workers as the furlough scheme begins to taper off, according to analysis by the Resolution Foundation.

The think-tank’s Living Standards Audit 2021 explored the impact of the pandemic on the millions of workers furloughed since March 2020 and was released last week alongside the most recent HMRC Coronavirus Job Retention Scheme (CJRS) statistics.

The latest figures revealed that only one in five of those who were furloughed in February were still furloughed in May, and there was a sharp fall in the number of people on furlough in May, with 2.4 million using the scheme at the end of the month, a 1.2 million drop from the 3.5 million furloughed at the end of April.

However, the Resolution Foundation warned that older workers made up a disproportionate number of those still on the CJRS.

Its analysis found that of those aged 55-64 who were furloughed in February, more than a quarter (26%) were still furloughed in May, compared with only 6% of those aged 35-44 and 16% of those aged 18-44. Overall, it found those aged 45 and over made up more than half of all workers on furlough in May, a significant jump from 38% in the first lockdown.

‘Parked’ on furlough
Karl Handscomb, Senior Economist at the Resolution Foundation, said: “Reopening the economy has led to a surge in people returning back to work from furlough, particularly young people in sectors like hospitality and leisure.

“But not everyone is back working. Over one in four older workers who were furloughed during the recent lockdown have remained parked on furlough during the reopening, and now face a higher risk of unemployment as the scheme starts to be unwound.

“It’s crucial that the Government does all it can to prevent rising unemployment among workers of all ages this Autumn when the furlough scheme ends.”

This view was echoed by Sarah Coles, personal finance analyst at Hargreaves Lansdown, who said:  “Older people are returning to work far slower than younger people. Furlough numbers for the under 25s dropped like a stone as hospitality businesses reopened, but the older you were, the less likely you were to return to work, and furlough numbers for those aged 65 and over fell just 16%.”

Men, travel professionals also at risk
She added that other groups also remained vulnerable to job losses. “Men are slower to come off furlough too, and men have overtaken women using the scheme for the first time since the very earliest days of furlough. This owes much to the fact that so many have returned to hospitality businesses, and far more women work in these roles than men.

“In some industries, furlough is still widespread, most notably airlines at 57%, hotels at 57% and tour operators and travel agents at 51%, and in these industries the numbers on furlough dropped far more slowly than elsewhere.”

While the furlough scheme will continue until September, the changes to employer contributions that came into effect last week are likely to prove a trigger for some employers to make redundancies.

Starting from the beginning of July, employers have had to contribute at least part of the 80% of wages paid to furloughed workers. Their contribution is currently 10% (with the government paying the remaining 70%) though this will increase to 20% in August and September, before the scheme winds down.

Coles warned: “For those still stuck on furlough, there’s the risk their employers will be seriously reconsidering whether they can afford to keep them on now they are shouldering 10% of their wages – alongside pension and NI contributions. These questions will become even more pressing when the scheme tapers again in August.”

Photo courtesy of Canva.com

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