Increase in Temporary Employment During COVID-19 in UK- Is Temporary Work the New Normal?

As the Coronavirus pandemic continues to affect every single area of our lives, the labour market remains under severe pressure, but there are early signs that the decline is slowing.

COVID-19 has had a clear and significant impact on people’s wages and on their job prospects. There have been a number of studies which demonstrate that those who are most impacted are from the lower age groups and those on low salaries.

A large number of workers have also benefited from the Coronavirus Job Retention Scheme (CJRS), which has provided a lifeline to these workers through income support.

In early June, Chancellor Rishi Sunak revealed a raft of measures to protect jobs and restart the economy after lockdown, including a £2bn temporary job creation scheme for workers aged 18 to 24.

Announced in Sunak’s summer statement, the investment aims to shield Britain’s young people – the age group hardest hit by the economic fallout from the coronavirus pandemic – from unemployment.

 Under the “kick start scheme”, the government will fund six-month job placements with a minimum of 25 hours per week through Universal Credit for 350,000 young people aged 18 to 24 who are at risk of long-term unemployment. This is three times as many jobs than the previous Future Jobs Fund (FJF), which was introduced in response to the last financial crisis of 2009. 

In his statement, Sunak also announced a ‘jobs retention bonus’ for employers who bring furloughed workers back into employment. Organisations will receive £1,000 for each worker they continue to employ until January, as long as they are paid at least £520 per month on average across that period. 

As part of the package, the government will also pay employers £2,000 for every apprentice under 25 they hire, and £1,500 for every apprentice aged 25 and over during the next six months.

Furloughed workers

There are still around 9.1m employees on furlough which is 31% of the workforce.

Businesses are bringing workers back but more job cuts are expected. Around 17% of furloughed workers are at risk of redundancy.

Recent Payroll Statistics

In June there were 649,000 fewer people on the payroll compared to March 2020. There was a record fall in weekly hours worked, close to 16.7% in the three months to May compared to last year while vacancies in the three months to June also declined to an all-time low – at 333,000, it is nearly 60% lower than last year. However, monthly data suggest the decline in job markets is slowing as economic activity picked up in May, with average weekly hours increasing for both employees and the self-employed, and a decline in the number of people temporarily away from paid work in May, after an initial sharp rise in March and April.

Most job losses are expected to be in the hotel and restaurant sector, closely followed by retail and then entertainment and recreation.

Demand for temporary workers on the increase

Latest statistics show that despite the COVID-19 crisis, the demand for temporary work has increased at approximately 2.1%, compared to the same period a year ago.

The number of temporary employees as a percentage of total employment was 5.4%, steady when compared to a year ago.

Of the 1.51 million temporary employees during the period ended April 2020, approximately 411,370 were temporary because they could not find a permanent job; 420,810 did not want a permanent job; 113,941 had a contract with a period of training; and 570,991 cited other reasons.

Meanwhile, of the 1.50 million temporary employees during the period, 701,990 were men while 815,120 were women.

As the labour market tightens it is clear that temporary work will be a way back into work at least in the short term. This is particularly so for those people who have been displaced from their normal industries and who need to get back to work quickly to support themselves and their families.

Data Sources

PWC Econonmic Update July 2020 - https://www.pwc.co.uk/premium/covid-19/uk-economic-update-covid-19.pdf

Office of National Statistics (ONS)