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Two-thirds of working households suffer coronavirus pay cuts, survey reveals

9 Jun 2020 By Siobhan Palmer

Firms urged not to treat mental and financial health separately, as four-fifths of staff affected by wage reductions say it’s impacted their psychological wellbeing

Nearly two-thirds of UK employees have taken, or seen a member of their household take, a salary cut during the pandemic, a new survey has shown, with this affecting the wellbeing of many. 

Consultancy Barnett Waddingham polled more than 2,000 full and part-time employees and found 61 per cent reported that someone in their household had seen their wages cut. Of these workers, almost four-fifths (79 per cent) said it had affected their mental wellbeing. 

Among staff who had seen a fall in household earnings, 40 per cent said they had experienced increased anxiety as a result, while 39 per cent reported higher stress levels. More than a quarter (28 per cent) reported sleepless nights and a fifth (20 per cent) said they had experienced mood swings. 



Almost a quarter (23 per cent) said financial pressures were now their biggest worry – although a similar proportion (21 per cent) said wage cuts had not affected their mental wellbeing. 

Peter Meyler, head of workplace consultancy at Barnett Waddingham, urged employers not to treat financial and mental wellbeing issues in isolation. “There is a tendency among employers to try and split and respond to physical, mental and financial health separately. The Covid-19 crisis has reinforced that this ignores the reality,” he said. 

“Employers need to be careful not to view their actions in a vacuum. For those making decisions around pay and potential redundancies, now is the time to consider the impact on your employees’ wellbeing as paramount.” 


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Meyler advised employers to communicate and engage with staff effectively, as well as to listen to employees’ concerns and needs. When managing difficult decisions such as those around salary cuts and job losses, he said openness, clarity and empathy were key. 

The research also revealed disparities between different groups of people, with non-white employees more likely to see their mental wellbeing affected by pay cuts than their white counterparts. The vast majority of black, asian and minority ethnic workers whose households had taken a salary cut suffered deteriorating mental wellbeing (87 per cent), compared to 77 per cent of white workers. 

A similar disparity was evident between women and men, with 87 per cent of women whose households had seen pay cuts reporting their mental wellbeing had suffered, compared to 75 per cent of men. 

This research came as the Bank of England’s chief economist warned of a collapse in economic activity as a result of Covid-19. “We’ve seen a rapid rise in inactivity among workers – both people being made unemployed, but importantly… eight million people underemployed as a result of furlough schemes,” Andy Haldane told online attendees of the CogX technology conference. “That’s a level of inactivity in the jobs market we haven’t seen, possibly ever.”

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