Crisis in the capital

This report 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.

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, the number in in-work poverty was increasing, and 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 impact of the coronavirus pandemic. The claimant count in the capital has increased by 161%, faster than in any other region or nation of the UK.

The pandemic has hit low-paid Londoners hardest. Our polling suggests that low-paid Londoners are 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 worried both about their ability to keep their jobs, and to find new work during the crisis.

Things would have been much worse 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.  The withdrawal of scheme at the end of this month could have triggered a catastrophic second wave of job losses. We estimate that without the recent changes to the Job Support Scheme which will replace existing support, 270,000 potentially viable jobs would have been at risk in the capital over the winter.

Focus should now turn to supporting a transition to a post-Covid economy, with better work at its heart. We set out recommendations across four areas:

1. Job creation
2. Employment support
3. Retraining support
4. Social security support

This report was produced as part of the Better Work Network, a policy and practice-based initiative, hosted by Learning and Work Institute and Trust for London, dedicated to supporting progression from low pay and increasing the quality of work for all.