Unequal paths to recovery as economy reopens

Low-income workers are almost twice as likely to be laid-off or furloughed as high-income workers, according to a new UCL study examining income and consumption effects of Covid-19. The working paper, published by Puey Ungphakorn Institute for Economic Research , highlights that a significant proportion of those low-income workers - 70 percent from the bottom fifth of the income distribution - have struggled to afford living costs. While the UK's Coronavirus Job Retention Scheme provides 80% of salary for furloughed workers, many low-income households cannot afford a 20% earnings loss. Moreover, workers who are laid off must rely on universal credit for income support, and it usually takes five weeks to start receiving these payments. Co-author, Dr Suphanit Piyapromdee (UCL Economics) said: "Speaking broadly, we think that a good portion of these differences can be explained by variations in the sorts of jobs people do, such as their location flexibility, industry exposure, and physical proximity. "The bottom line is that the pandemic is widening inequalities in many dimensions and without effective income and employment support, these exacerbated inequalities may persist long after the economy has reopened." Drawing on data from the UK Household Longitudinal Study, the research documents inequalities in the impact of the pandemic along several dimensions including race, gender, education level and age. The outcomes by gender show that males and females are equally likely to experience some disruption to their normal work - however, among those with labour market disruption, females are four percentage points more likely to be laid-off (rather than furloughed) than males.