Crisis in the Capital: How to protect low paid workers and deliver better work in London

This report from the Learning and Work Institute, produced as part of the Better Work Network, explores the impact of the coronavirus crisis on London’s labour market, and on low-paid Londoners. It sets out what could be done by central government and London local government to mitigate the impact of the crisis, and to build back better.

Based on a large scale representative survey of 1,024 Londoners, interviews with low paid Londoners, and analysis of the latest labour market data, the report details findings which show that it increasingly clear that the crisis is not hitting all groups equally, and it is the lowest paid and most insecure workers who are most at risk.

• The capital is the wealthiest region in the UK, but also the most unequal. Despite sustained growth and a significant increase in employment in recent years, many Londoners were struggling to get by on the eve of the pandemic. Nearly one million Londoners were earning below the London Living Wage when the crisis hit, and the number in in-work poverty was increasing. Low pay is particularly likely to impact on certain groups of Londoners, including women, young people, those with lower levels of qualifications, and those from black ethnic backgrounds. Londoners faced high levels of insecurity, with one in nine workers being in some form of insecure work.
• The prevalence of low pay and insecure work left London’s labour market particularly vulnerable to the seismic impact of the coronavirus pandemic. The claimant count in the capital has increased by 161% to 484,000, faster than in any other region or nation of the UK. The increase has been faster still among young people, with the number of Londoners aged under 25 claiming benefits nearly trebling since the start of the crisis.
• The pandemic has hit low paid Londoners hardest. Our polling suggests that low paid Londoners are nearly twice as likely to have been furloughed compared to other workers in the capital, and nearly four times as likely to have lost their jobs. Low paid Londoners are more likely to say they are worried about their finances, and they are more likely to have struggled with basic items such as food, and with bills. Low paid workers in the capital are more likely to have had to fall back on a variety of support, including Universal Credit – which has seen claims nearly double – as well as borrowing and food banks. London’s low paid workers are also more concerned about the future; they are more worried both about their ability to keep their jobs, and to find new work during the crisis.
• The impact of the pandemic would have been far larger still had it not been for the Coronavirus Job Retention Scheme. 1.4 million jobs were furloughed between March and July, and there were still 557,000 jobs furloughed at the end of August; the highest proportion of furloughed jobs of any region or nation in the UK. Low paid Londoners are much more likely to have been furloughed than other workers in the capital.
• The withdrawal of the Coronavirus Job Retention Scheme at the end of this month, and the introduction of the Job Support Scheme had represented cliff-edge in support, which could have triggered a catastrophic second wave of job losses. The report estimates that without the recent changes to the scheme, 270,000 potentially viable jobs would have been at risk in the capital over the winter.

The report sets out recommendations for central government, the Mayor of London and London Boroughs across four key areas:

• Job creation – Central government should work with local government to invest in jobs creation, with a focus on jobs-rich and socially useful sectors, including social care, childcare, housing and green jobs. London local government should take the lead in making Kickstart a success, by driving up the number of placements, focusing on improving quality of placements, and providing support for young people who are not kept on after their placement.
• Employment support – Previous employment support programmes have been too centralised, and while they helped many into work, they have not succeeded in helping many people out of poverty. Any post-pandemic employment support programme should be substantially devolved to the capital, and focused not just on tackling unemployment, but supporting entry into good jobs, and supporting progression.
• Retraining support – Central and local government should ramp-up retraining support to help Londoners to upskill and re-train for the jobs that will be available. This should include government extending the lifetime skills guarantee and improving maintenance support. The Mayor of London should ensure there is a clear offer for newly unemployed Londoners, including through new sector-based skills academies.
• Social security support – Even if we do all of the above, we are likely to see an increase in unemployment in London and across the UK, both in the short and medium term. The Government should extend the £20 increase to Universal Credit to at least April 2022, in order to support the incomes of those who lose their jobs.