You are here: Home - Household Bills - News -

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

Written by: Emma Lunn
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.”

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.

Everything you need to know about being furloughed

Few people had heard of ‘furlough’ before March 2020, but the coronavirus pandemic thrust the idea of bein...

The savings accounts paying the most interest

If one of your jobs this month is to get your finances in order, moving your savings to a higher paying deal i...

Coronavirus and your finances: what help can you get in the second lockdown?

News and updates on everything to do with coronavirus and your personal finances.

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.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

Read previous post:
Buy now pay later users struggling to pay back debts

A fifth of buy now pay later (BNPL) users are unable to pay back Christmas spending without taking on more...