Almost one in three furloughed workers at UK hotels, restaurants and cafes could lose their jobs by the end of the year, according to a new report.
Analysis published on Wednesday by consultancy PwC suggests GDP will drop between 10% and 13% this year.
Some have since returned to work, but since the crisis began at least 9.5 million workers have been placed on the UK government’s furlough scheme. The crisis policy, which has cost £29.8bn ($37.7bn) so far, was designed to stop the pandemic triggering mass job losses.
Workers in accommodation and food services, where furlough numbers are high and the virus and social distancing have hit both demand and capacity, appear the most at risk. Some 32% of furloughed staff in these sectors risk redundancy, PwC suggests.
Other sectors where more than a fifth of the furloughed workforce could be at risk include education, arts, entertainment, recreation, and other services industries.
PwC’s latest UK Economic Update report, published on Tuesday, also says the economy’s troubles could leave 19% of furloughed transport and storage workers at risk, despite soaring online retail demand.
“Part of the success of the furlough scheme and other fiscal and liquidity support was that it relieved working capital pressures faced by businesses, reducing the need to lay-off workers to free up cash flow or prevent permanent business closures,” said Jing Teow, senior economist at PwC.
“However, the projected decline in demand for workers as a result of weaker economic activity means that in the absence of further support, not all furloughed workers will have jobs to return to when the furlough scheme ends.”
She also said the pandemic had accelerated trends like automation. Sectors like retail, transport and manufacturing are likely to see increased automation as firms look “to improve resilience and maintain social distancing.”
She said upskilling workers with a focus on the digital economy, growing sectors and harder-to-automate skills should be a priority. “Workers will need to adapt more quickly to these changes than before.”
It comes as separate survey data suggests the average UK firm is operating at only around 53% of pre-pandemic full capacity. The British Chambers of Commerce (BCC) said the member poll showed the economy remained in “first gear.”