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Low-paid workers in UK more than twice as likely to lose job in pandemic

Richard Partington Economics correspondent
·3-min read
<span>Photograph: Facundo Arrizabalaga/EPA</span>
Photograph: Facundo Arrizabalaga/EPA

The UK’s lowest-paid workers are more than twice as likely to have lost their jobs in the coronavirus pandemic than higher-paid employees, according to a study revealing rising inequality amid the crisis.

The Institute for Employment Studies said one in 20 low-paid workers had fallen out of a job in each quarter since the pandemic struck – equivalent to 250,000 workers across Britain – compared with one in 50 of those on higher wages.

While employment is plummeting for the low-paid – driven by job cuts in sectors hardest hit by lockdowns such as food services and hospitality – the report found job opportunities were increasing for higher-paid staff, including in the public sector, technology and finance. The study defined low pay as less than £9.50 an hour, and £10.85 an hour in London.

The chancellor, Rishi Sunak, is under pressure to launch a fresh package of financial support for businesses and workers as the UK economy edges closer to a double-dip recession during the third national lockdown in England. The chancellor also faces calls to extend a £20-a-week uplift in the value of universal credit benefits, launched last year and due to expire at the end of March.

The latest lockdown measures are expected to result in about two-thirds of low-paid workers – 4 million people – either being away from work, on furlough or working fewer hours than normal, the Institute for Employment Studies said. It said this would be double the rate of work disruption for staff who are not low-paid.

Warning that the pandemic would dramatically exacerbate inequalities in the world of work, the report also included interviews with 40 low-paid workers, and found that many were slipping through cracks in the government’s emergency support schemes such as furlough. It said in many cases low-paid workers reported being denied furlough, having their hours cut, being expected to work without adequate protection, and seeing their living costs increase while their incomes fell.

Urging the government to take further action to support low-paid workers hit hardest by the pandemic, the institute said maintaining the £20 uplift in universal credit was vital for supporting struggling households, and a temporary suspension of the benefit cap – which limits the amount of government support households can receive – was needed this year.

Unemployment is expected to rise dramatically after the furlough scheme expires at the end of April. The report said 2.6 million people were expected to be out of work, up from about 1.3 million before the pandemic struck.

The institute said statutory sick pay should be increased to at least £200 a week, more than double the current £95.85.

Tony Wilson, the insitute’s director, said: “This [report] shows the unequal nature of the pandemic. With unemployment set to rise sharply this year, we are likely still in the foothills of the employment crisis, but it has already taken a significant toll on low-paid workers. We can take action now and at the budget to address this. Looking further ahead, we need to plan for the recovery and ensure that we put full employment and decent work at the heart of it.”