Stuart Gentle Publisher at Onrec

Construction and extraction workers wages hit hardest by Covid-19 in the UK

Of the industries that have been badly affected by coronavirus (Covid-19), construction and extraction workers have seen the biggest impact on their wages

The coronavirus epidemic has affected every industry, but some more than others. With hospitality shut and non-essential retail paused, the majority of consumer spending was essentially halted. Although restrictions are now being lifted, economists have predicted that it will take three years for the UK to recover from the overall impact.

Check-a-Salary, the salary comparison platform, has conducted research into the wages of those working in industries most affected by the epidemic in order to uncover the real impact it has had.

Of the eight UK industries analysed - including nursing, construction and retail sales - the wages of construction and extraction workers have seen the biggest impact in the first half of 2020.

Based on wages from the past two years, construction and extraction workers have seen the biggest overall decrease, with their wages falling by 7 per cent in the first half of 2020. This year alone, February saw a decrease of 9 per cent compared to February 2019. In April, estate agents estimated that work had stopped at 80 percent of UK housebuilding sites, with social distancing measures inhibiting manual work in people's homes - a fact which has had a significant impact on the industry.

Computer occupations in the UK saw a 1 per cent decrease in wages but this should steadily increase again now that people start returning to offices.

The drop in wages also coincides with the influx of unemployment during the epidemic and the government furlough scheme. Around 8.7 million British workers have been furloughed since the current crisis began – around a quarter of the workforce – meaning they receive 80 per cent of their usual salary from the government.

From March to May the UK unemployment rate was estimated at 3.9 per cent and is predicted to increase as the furlough scheme comes to an end. Those aged 16 to 24 years have been worst affected by the current situation, with the estimated number of people unemployed increasing by 47,000 in the year to 540,000.

Check-a-Salary’s Co-Founder Danny Aldridge said: “Sadly it's not surprising that construction and extraction worker wages have suffered the most in the first six months of the year."

“The combination of furlough, redundancy and a recession will affect those who are more likely to be working on short term contracts - like construction workers - at a faster rate. In the second half of the year it is essential that the government is proactive when it comes to helping the industries worse hit so we don't see further negative impact upon the wages of workers in the UK."

Wage predictions for 2021

The coronavirus epidemic has led most of the developed world to see negative growth. From April to June - April being the first full month after the UK went into lockdown - figures have revealed that Britain’s economy shrank by a record 20.4 per cent. This means the country is on course for the worst recession in more than three centuries.

The last official recession ran from 2008 - 2009, lasting 15 months, the same as the recession in the early 1990s.

In these circumstances, firms will try to reduce costs by keeping wages low. This is especially relevant to temporary workers without contracts, which is common in construction and extraction, which is potentially why a reduction can already be seen in the first half of 2020 from Check-a-Salary’s data. This was a key feature of the 2008 recession, but it was also aggravated by rising costs of living, such as higher taxes/oil prices. However in 2020, cost-push inflation should remain lower due to falling oil prices.

From 2008 - 2014 UK real wages hit as slow as -6 per cent, which means in 2021 wages may reach the same or a more significant lowpoint. Alongside external factors such as taxes and oil prices, the severity of the impending wage decrease will ultimately depend on how well the country responds to the end of lockdown.