Generation Z and lower earners ‘pummelled by the pandemic’
Younger workers and people in low paid jobs have suffered the worst financial effects of the pandemic, according to the Office for National Statistics (ONS).
The ONS has published earnings data, gender pay data, and information on high and low pay for 2020.
The work was done in April, when 8.8 million employees, about 11% of the workforce, were furloughed. About half of these workers did not have their pay topped up by their employer.
The study found that the average weekly pay was up £1 from last year to £586 – but after inflation this is a fall of 0.9%.
Hourly pay increased (up 0.7% even after inflation), but the number of hours paid was down. This is because of a fall in the hours worked by non-furloughed employees.
Younger people and lower-paid employees saw their hourly pay rate fall – with the lowest earning 5% of workers paid 16.1% less than last year, and the pay of the lowest earning 10% down 8.1%.
The ONS found younger workers are more likely to have been furloughed, and less likely to have their pay topped up by their employer. Low-paid jobs were more than five times more likely to be furloughed with reduced pay.
Sarah Coles, personal finance analyst at Hargreaves Lansdown, said: “Generation Z and lower earners have seen their incomes pummelled by the pandemic. The furlough scheme helped protect millions of people from the worst, but half of those on furlough didn’t have their wages topped up, so still had to get by on ever-decreasing incomes. Younger people and those on lower pay were far more likely to have been furloughed without their pay being topped up.
“Meanwhile those who continued to work weren’t immune to pay cuts either. Those working in the accommodation and food sector in particular saw their average hours drop 12% – which disproportionally affected younger people.
“Millions of people are having to get by on less, and while the new furlough scheme will push the government contribution to furlough back up to 80%, the months of lower incomes will have taken their toll.”
On the face of it, the ONS figures show promising news on the gender pay gap. It narrowed this year to 7.4%, and is now close to zero for women under the age of 40.
However, there are still big structural issues to overcome, because in higher earning roles and women over 40, the gap is nearly 10%.
“The question for many people will be whether the pandemic reinforces the pay gap. More men were initially on furlough, but women were less likely than men to have returned to work by September – more than their representation in affected sectors would imply,” said Coles. “In some cases this will be due to gender roles in providing care for children. The huge issues around childcare weighed more heavily before children went back to school and daycare, but there’s a risk the gender inequality in those who returned to work may be locked in already. There’s also a chance that future lockdowns will affect children again – which could make things even worse.”