Low-paid workers twice as likely to have lost jobs during pandemic, analysis finds

22 Jan 2021 By Maggie Baska

Experts call for urgent action to protect incomes and say ‘full employment and decent work’ must be at the heart of economic recovery

The lowest-paid workers in the UK are more than twice as likely to have lost their jobs during the coronavirus crisis than their higher-paid counterparts, according to research.

The study, by the Institute for Employment Studies (IES) found one in 20 low-paid workers had lost their job in each quarter since the pandemic struck – equivalent to 250,000 workers across the UK – compared to just one in 50 of those on higher wages. 

The IES said low-paid workers were also twice as likely to either be on furlough or have had their hours reduced during the pandemic, with two-thirds of all low-paid employees – almost four million people – seeing their work affected in one of these ways. The study defined low pay as less than £9.50 an hour, and £10.85 an hour in London.

The research said this was driven by higher rates of low pay in ‘shut down sectors’ – sectors hardest hit by lockdown restrictions – but acknowledged that in every sector low-paid workers were significantly more likely to have been away from work or to have had fewer hours.

Tony Wilson, director of the IES, said the pandemic had already taken a significant toll on jobs and incomes, with low-paid workers bearing the brunt. With unemployment set to rise sharply in 2021, Wilson said: “We are likely still in the foothills of the employment crisis, but we can take action now and at the budget to address this.

“Now is not the time to be cutting universal credit or cutting back on employment protections,” Wilson added. “We need to do more to support low-income households, reform sick pay and ensure that workplace rights can be properly enforced. Looking further ahead, we need to plan now for the recovery and ensure that we put full employment and decent work is at the heart of it.”

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While there were higher rates of unemployment in shut down sectors, including food services and hospitality, the IES report found job opportunities were increasing for higher-paid staff, including in the public sector, technology and finance. 

Even though low-paid workers were more likely to return to work as social distancing restrictions began to ease in mid-late 2020, the report, which was funded by the Standard Life Foundation, found jobs were still greatly affected. By late summer last year, 30 per cent of low-paid workers were still not “working normally”, compared to 20 per cent of those earning above the real living wage.

The report also said 2.6 million people were expected to be out of work, up from about 1.3 million before the pandemic struck.

The IES called for statutory sick pay to be increased to at least £200 a week, more than double the current £95.85.

Mubin Haq, chief executive of the Standard Life Foundation, said the report provides further evidence of the pandemic’s severe impact on the low-paid as these individuals face “lost jobs, reduced hours, insecure work” and “meagre sick pay”. 

“We have seen some progress, but culture and practice remains poor in too many places,” Haq said. “More action on incomes, protecting rights and employment support is needed if we are to ease the financial pain and insecurity many families are facing.”

The IES study comes as new research from Sheffield Hallam University found a year of the pandemic has wiped out a decade of progress in reducing unemployment in the UK’s industrial heartlands.

The report, commissioned by the Coalfields Regeneration Trust and the Industrial Communities Alliance, found in the nine months between the start of the crisis in February and November 2020, unemployment rose by 310,000 in older industrial towns, 100,000 in the former coalfields and 140,000 in the main regional cities.

The researchers added, if a third of the workers on furlough at the end of October 2020 were to lose their jobs, redundancies would increase by 230,000 in the older industrial towns, by 80,000 in the former coalfields and by 80,000 in the main regional cities.

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