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Half of low paid workers have suffered income loss due to Covid-19

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Written by: Emma Lunn
01/02/2021
The lowest paid are most likely to have lost income and increased debt in pandemic, according to the Trades Union Congress (TUC).

The TUC found that 50% of low-paid workers have lost income due to the pandemic, compared to 29% of higher earners.

The TUC is calling for a ‘workers’ budget’ and the extension of the furlough scheme until the end of 2021.

A TUC poll found that low earners are more likely than middle and higher earners to have been forced to cut spending and take on debt during the pandemic.

More than a third (37%) of workers said that their household had suffered a reduction in disposable income since the pandemic began. This rises to half (50%) for workers with annual earnings below £15,000, while it is just three in 10 (29%) for workers earning more than £50,000.

The lowest earners are also the most likely to have had to reduce spending and take on debt.

The TUC says that low-paid workers have been worse affected because low workers are more likely to have insecure work, such as zero-hours contracts, which give them no protection when their hours of work are cut back.

Low-paid workers also have less household budget flexibility, and can’t easily reduce their spending.

The lowest earners are also more likely to work in hard-hit sectors such as hospitality, leisure and non-essential retail. Middle and high earners, meanwhile, are more likely to have jobs that can be done from home, meaning they can avoid the need to be furloughed and may also make savings such as reducing commuting costs.

The TUC points out that although furlough is protecting incomes, it can pay less than minimum wage. The Coronavirus Jobs Retention Scheme (CJRS) doesn’t have a floor, meaning that some workers receiving 80% of their wages have fallen below the minimum wage.

TUC budget submission

The TUC’s budget submission calls for a workers’ budget. Its recommendations include:

  • Extending the job retention scheme until the end of 2021.
  • A wage floor within the CJRS to prevent furlough pay falling below the minimum wage.
  • Permanent retention of the £20 per week increase in universal credit, and an end to the five-week wait for new universal credit claimants to receive payment.
  • Increasing child benefit and child tax credit and removing the two-child limit.
  • Fixing statutory sick pay by raising it to £330 per week and by extending eligibility to the two million low-paid workers currently excluded from SSP.
  • Raising the national minimum wage to at least £10 per hour.

Frances O’Grady, TUC general secretary, said: “When a crisis hits, the most exposed should get the most protection. But many low-paid workers are struggling through the pandemic on less money and with higher costs. And they are falling into deeper poverty and debt.

“Good government means stepping in to help. The chancellor should help by extending furlough to the end of the year, with a guarantee that support will never be less than minimum wage. And last year’s boost to universal credit should be kept – permanently.

“Many of these low earners are key workers who have kept our country going. We owe it to them to build a fairer economy after the pandemic. The chancellor should give Britain a workers’ budget next month. It should be a plan for full employment, with decent pay and job security for every worker.”

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