Low-paid workers bearing the brunt of Covid fall in employment, study finds

Those earning less more likely to have been laid off, had their hours cut and missed out on government support during the crisis

Low-income workers are bearing the brunt of the coronavirus pandemic as a result of being laid off in higher numbers and so missing out on government support, according to research. 

The analysis, which provides the first detailed assessment of official labour force survey data during the height of the coronavirus crisis between February and April, found that employment for those in low-paid roles fell by four percentage points during this timeframe – equivalent to 140,000 jobs. In comparison, employment for those in higher-paying jobs remained unchanged during the same period. 

The study said this suggested there was a sizable group of low-income workers – defined as those earning less than the real living wage (£9.50 per hour or £10.45 per hour for those in London) – missing out on government support, such as the coronavirus job retention scheme and the self-employment income support scheme.   

The research, conducted by the Institute for Employment Studies (IES) and funded by Standard Life Foundation, also showed low-paid workers were twice as likely to have been laid off or to be working fewer hours because of the pandemic than high-paid workers. One in five (20 per cent) low-paid workers who worked fewer hours in April reported it was down to the economy, compared to one in 10 (13 per cent) higher-paid workers. 

However, both types of worker reported putting in fewer hours in general as a result of non-standard patterns of work – accounting for a third (32 per cent) of high-paid workers and a quarter (25 per cent) of lower-paid workers. 

Tony Wilson, director of the IES, said the analysis suggested many low-paid workers had already “slipped through the cracks” during the crisis. He said this reflected the “often precarious nature” of such work, with the analysis finding low-paid workers were two-thirds more likely to be in temporary work and five times more likely to be on zero-hours contracts than their higher-paid counterparts.

Get more HR and employment law news like this delivered straight to your inbox every day – sign up to People Management’s PM Daily newsletter

The research also found young workers (those aged 16 to 24) and those with ethnic minority backgrounds were more likely to be off work during this period. The IES said this was a result of these groups being concentrated predominantly in certain occupations, where the impact of the pandemic was potentially more severe. 

According to the research, young people were more likely to be away from work than older workers, a nearly five percentage point difference between these groups in April. Ethnic minority low-paid workers were two percentage points more likely to be away from work during this period than their white counterparts. 

During the chancellor’s summer statement last week, Rishi Sunak announced a raft of measures to protect jobs and restart the economy after lockdown, including a £2bn temporary job creation scheme for workers aged 18 to 24.

Under the ‘kickstart’ scheme, the government will fund six month-long job placements with a minimum of 25 hours per week. This will be funded through universal credit, and aims to reach 350,000 people aged 18 to 24 at risk of long-term unemployment – three times as many people as the previous Future Jobs Fund, introduced in response to the last financial crisis. 

Sunak also announced a £1,000 ‘jobs retention bonus’ for employers bringing furloughed workers back into employment through to January – as long as they were paid at least £520 per month on average across that period. 

However, Mubin Haq, chief executive of the Standard Life Foundation, said the chancellor’s announcements were unlikely to prevent further job losses. He said an improved safety net was needed for those made unemployed by the pandemic, adding that those on the lowest pay appeared “to have been the ones to have been least protected” by previous job protection measures. 

“This trend is likely to continue as redundancies mount up, with low-paid sectors such as hospitality and retail being particularly affected,” Haq added.   

The research found low-paid workers were twice as likely to be searching for a new or additional job during the pandemic, with 9 per cent – equivalent to nearly 400,000 workers – looking for new work while already employed, either for financial reasons or to gain a better quality of employment. This compared to nearly 5 per cent of higher-paid workers who said the same. 

“With nearly one in 10 low-paid workers looking for a new job, we must ensure those in work are getting the help they need to find a better job,” Wilson added. “So while the government’s plan for jobs is welcome, it also needs to address job security and precarious work.”