You are here: Home - Household Bills - News -

Generation Z and lower earners ‘pummelled by the pandemic’

Written by: Emma Lunn
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).

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.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Flight cancelled or delayed? Your rights explained

With no sign of the problems in UK aviation easing over the peak summer period, many will worry whether holida...

Rail strikes: Your travel and refund rights

Thousands of railway workers will strike across three days this week, grinding much of the transport system to...

How your monthly bills could rise as the base rate reaches 1.25%

The Bank of England has raised the base rate to 1.25% as predicted – the fifth consecutive rise in just six ...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week