Thursday 7 May 2020 12:29 pm

Fifth of employees expect they will take a permanent pay cut at the end of the year

A fifth of employees expect to take a permanent pay cut by the end of the year due to the coronavirus pandemic, according to an exclusive poll for City A.M. 

The poll, conducted by Redfield and Wilton Strategies, found that 18 per cent of respondents said it is unlikely they will have the same salary at the end of this year. However, the majority (56 per cent) said it is “nearly certain” or “likely” that they will have a job with the same salary at the end of this year. 

Read more: Bank of England: UK economy could suffer biggest crash in 300 years

The pessimism comes as 6.3m employees have been placed on furlough. There are concerns that an end to the scheme, as planned on 30 June, will lead to mass redundancies. 

Eighty per cent of respondents said they expected unemployment to be higher at the end of 2020 than the current four per cent unemployment reported by the Office for National Statistics (ONS). Of those, 65 per cent expect the unemployment rate to be higher than 10 per cent. 

The Bank of England today said it expected unemployment to soar to nine per cent in the second quarter of this year, higher than in the wake of the global financial crisis.

Listen to our daily City View podcast as we chart the economic fallout and business impact of the coronavirus pandemic.

Economy ‘needs time to recover’

Eighty three per cent of respondents said the economy will “need some time to recover” from the coronavirus pandemic, reflecting the dire situation the Bank of England (BoE) presented today.

Data released today shows the UK economy is likely to shrink by a staggering 14 per cent.

The Bank said it expected the UK economy to contract by 25 per cent in the second quarter of the year, having shrunk around three per cent in the first quarter. 

Read more: Unemployment rate set to surge in UK coronavirus lockdown

A quarter of Brits call for government to increase taxes

The government has committed billions to helping employees and embattled sectors through the worst of the coronavirus crisis. As a result, a quarter of Britons think the government should increase taxes to pay for the spending, while 22 per cent think borrowing should be higher.

The furlough scheme has already cost approximately £8bn, supporting the 6.3m employees on furlough. Twenty two per cent of respondents think the government should reduce spending.

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