The poorest people in the UK have borne the brunt of the economic fallout from Covid and risk being the least able to recover once the pandemic ends, a report has warned.
Anti-poverty charity the Joseph Rowntree Foundation (JRF) said people who were trapped in poverty before the pandemic have suffered the most financial damage during the crisis. The foundation said an “unacceptable” 14.5 million people – equating to more than one in five people in the UK – were in poverty before the pandemic hit in March last year.
The report also found those who had been struggling before Covid were more likely to work in precarious jobs or sectors of the economy that had been hardest hit by lockdown restrictions.
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In its annual poverty report, the JRF said part-time workers, low-paid workers and sectors where there are much higher rates of in-work poverty – such as hospitality and leisure and construction – had been negatively affected by the pandemic. The JRF said low-paid workers were more likely to have experienced a cut to their income and hours, as well as an increase in costs associated with being at home.
Helen Barnard, director of the JRF, described the findings as a "damning indictment of our society".
“2020 was an extraordinarily difficult year for all of us and has shifted the dial in terms of what support is possible," Barnard said. "Learning from this, there are serious injustices we cannot put off tackling any longer. We must not rest until everyone, regardless of their background, is able to achieve a decent life.”
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The JRF called on the government to make “the right decisions to avoid another damaging decade" similar to what the UK experienced in the fallout of the 2008 financial crisis, including “further bold action to retrain workers and create good-quality new jobs”.
Additionally, the report said earnings for low-income working families would need to increase, and more people needed to be in secure, good quality work.
Jon Boys, labour market economist at the CIPD, told People Management that the UK was working in an environment that was "actively working against us". While a jobs boom before the pandemic had allowed positive government actions, including an increase in the national minimum wage, the economic impact of lockdown restrictions had created a macro-constraint on employers, he said.
"We can issue guidance for employers, but ultimately, if your sector is shut down, then all the agency of employers in the world is not going to help," Boys said. "In the short term, the support is going to have to come from the government, and that's the path we've gone down over the past year,” he said, pointing to the furlough scheme as an example.
The JRF report said more than four in five (81 per cent) people working in hospitality and leisure had been negatively financially impacted, compared to just 16 per cent of those in financial services. Almost three in five (58 per cent) workers in construction were negatively financially affected by the pandemic, and more than half (54 per cent) of those in retail experienced the same.
More than half (51 per cent) of workers in hospitality and leisure saw reduced hours or pay, and 17 per cent had lost their jobs.
The report comes as Morrisons announced plans to increase its minimum pay for up to 96,000 workers to at least £10 per hour from April, up from £9.20. The supermarket chain said that, for the majority of its workers, the pay rise would be approximately 9 per cent, and that this would boost the weekly pay of someone working 36.75 hours per week from £330.10 to £367.50.
Retail trade union Usdaw negotiated the £10 per hour basic rate, which is 50p an hour above the voluntary Living Wage Foundation rate. Joanne McGuinness, national officer for Usdaw, said the pay rise was “now the leading rate of the major supermarkets”.
"It's been a tough time for food retail staff who have worked throughout the pandemic in difficult circumstances," McGuinness said. "They provide the essential service of keeping the nation fed and deserve our support, respect and appreciation. Most of all they deserve decent pay and this offer is a welcome boost."