Low earners bear the brunt of job cuts in high pay packet areas

Areas of the UK that house people on higher pay packets have registered some of the steepest falls in jobs during the Covid crisis, reveal brand new figures released today.

Research from the Resolution Foundation shows Westminster in central London, the area of the UK with the highest average earnings, experienced a 3.6 per cent drop in jobs during the pandemic.

Meanwhile, Leicester, the UK’s lowest-wage area, had seen jobs jump one per cent over the same period.

London’s jobs market has absorbed the harshest hit from the Covid crisis and is lagging behind other areas of the country in its recovery from the pandemic. Job opportunities in the capital are still three per cent below their pre-pandemic level, the Resolution Foundation said.

The research suggests people on lower wages have borne the brunt of job losses in areas where pay packets are high.

A large proportion of London’s workforce is employed in the transport, leisure and hospitality sectors, meaning workers in the capital were more susceptible to lose their job amid restrictions on economic activity to curb the spread of Covid.

High earners are more likely to work in industries that were able to rapidly pivot to remote working without much disruption to their normal workflow, such as financial and professional services. As a result, these workers were less exposed to job losses.

The downturn in commuters and lower levels of travellers into central London has hit cafes, pubs and bars’ income, possibly prompting these businesses to enact job cuts.

Commuter areas, such as Newham in east London, have relatively higher furlough rates compared to the rest of the country, indicating businesses in these places are struggling amid lower transport usage as people continue to work from home.

Charlie McCurdy, Economist at the Resolution Foundation, said: “Low-paid workers have borne the brunt of the labour market impact of the pandemic, but those same workers in high-wage areas of the UK appear to have been hit hardest during the recovery, with those places experiencing significantly higher job falls than low-wage areas.”

“In the early part of the crisis, city centres and coastal areas were especially hard-hit because many jobs in such places depend on demand from people outside the area.

“Since England’s reopening in June, jobs in many tourism-reliant areas have bounced back to pre-pandemic levels, but some cities – and particularly London – have struggled to return to life.”

The Resolution Foundation said that if the shift towards home working continues, it will have serious implications for the geographic shape of jobs and living standards across the UK.