No matter where you work or what country you’re in, we’re all at risk from the coronavirus.
But Covid-19 is far from the great leveller some would have us believe. The virus doesn’t discriminate – but the UK labour market certainly does.
Some people have been lucky enough to spend the last two months working from the comfort of their homes on full pay. Others have had no choice but to continue working as normal, either because of the type of work they do or because they can’t afford not to.
Some will have saved hundreds on reduced transport costs. Others have been so strapped for cash that they’re having to get by without essential goods, take on debt, or turn to our broken social security system for help.
Low-paid people are more likely to have to go to work, more likely to be furloughed and less likely to receive a good level of sick pay.
That not only puts them at a higher risk of contracting the virus, but also increases their chances of taking a financial hit and falling into debt and poverty even if they don’t get ill.
This crisis has exposed – and exacerbated – glaring inequalities in the UK labour market.
Last week the prime minister announced that, after nearly two months of lockdown, everyone who was unable work from home should be encouraged to return to work.
This advice left many rightly anxious about safety. But spare a thought for those who’ve been working since this pandemic started.
ONS data shows that in mid-April, less than half of the workforce in businesses that were still trading were working from home. But this figure only tells half the story.
The number of people working from home varies dramatically by industry. In a handful, the vast majority of staff have been working from home. But in many others, it’s less than half.
In the accommodation and food sector, for example, just 14 per cent were working from home. Compare that with the information and communicator sector, where it was 87 per cent.
Workers in the highest paid industries are also the most likely to work from home, while those in sectors like accommodation and food earn less than the average.
Throughout the pandemic, key workers have stayed at work and kept essential industries going. Despite the vital work they do, many are also not getting paid enough. Four out of ten key workers earn less than £10 per hour. Nearly two-thirds are women, and 2.5 million of them earn less than £10 an hour.
If someone can’t work from home, one of two things are likely to happen.
Either they keep working in dangerous conditions or they get furloughed – a sign that their job would be at risk were the job retention scheme not in place.
This is evident in the furlough rate by industry, which shows industries with low rates of homeworking tending to have higher furlough rates.
In the accommodation and food sector, for example, just 14 per cent of the workforce is working from home among businesses still trading. 73 per cent of the workforce has been furloughed, and eight out of ten businesses have paused trading.
For those who have kept working, contracting Covid-19 can often mean financial hardship. Many low-paid workers currently have no access to adequate sick pay if they start showing symptoms.
Statutory sick pay is currently £96 per week (around a fifth of average weekly earnings), making it one of the least generous sick pay rates in Europe. Around 1.8 million employees don’t qualify for it because they don’t earn enough, and a further 5 million miss out because they’re self-employed.
An employer can offer a higher rate of occupational sick pay if they choose to, with some offering full pay. But not all do, with an estimated 26 per cent of employees (7 million) only getting the basic statutory sick pay.
This varies by occupation, with caring and elementary workers the most likely to only get the bare minimum – and higher paid occupations most likely to get more generous support.
People with Covid-19 symptoms and no or little sick pay will face a stark choice: go to work with what might be coronavirus or stay at home for two weeks and face a massive drop in income.
This will be a particularly tough choice for those already struggling on low pay. For these workers, no pay for two weeks could mean no longer having the money to pay the bills, buy essentials, or keep up with debt repayments.
A stint on statutory sick pay isn’t the only potential loss of income.
Unions helped to negotiate the government’s job retention scheme (JRS) to protect jobs – and so far it’s likely to have saved millions. Even so, a 20 per cent pay cut is substantial, especially for those already earning the minimum wage.
For those who do lose their job or fall through the scheme’s cracks, the only option is the benefits system – and that means an even bigger drop in income. Research by NEF found that women, young people, BME workers, and renters are at particularly high risk of missing out on JRS support.
Anyone who needs income support will have to apply for universal credit (UC). The government increased the basic payment on UC by £1000 per year in March, but it’s still only around £96 per week for those 25 and over. By both European standards and our own historical standards, the UK’s benefit replacement rate is very low.
The impact on household finances is already becoming clear. Before the pandemic, we repeatedly warned of a growing household debt crisis . Similarly, debt charity StepChange has warned that the financial resilience of households was ‘critically low’ before the crisis hit, calling for radical long-term policies to support households.
Research by Citizens Advice found that over 13 million people have already been unable to pay at least one bill (or expect to be unable to do so) because of the pandemic. Those in insecure work are over three times more likely than other workers to have missed a bill payment.
The food bank charity The Trussell Trust has reported its busiest ever period during coronavirus , with 81% more food parcels given out during the last two weeks of March 2020, compared to the same period in 2019. A recent report by IPPR highlights how interventions to help with personal debt will provide ‘breathing space’, but an uncertain future after that.
The report also examines how different work experiences during the pandemic will impact on household finances.
Before this crisis, people on low-incomes were spending 60 per cent of their income on essential items. For higher income households it was around 40 per cent, leaving them with more to spend on optional activities likes holidays and eating out.
Those optional extras can be quickly cut out when people face a drop income – especially as many aren’t even possible during a lockdown. A high-income household working from home on full pay could therefore be saving hundreds a month right now.
But a low-income household where the main earner has been furloughed on 80% of pay will face a squeeze on income that could mean falling into debt (or getting deeper into it).
So this pandemic is likely to widen inequalities between high and low income groups, especially between those who rent and wealthy property owners.
The type of job you do during this pandemic doesn’t only affect your finances – it may also increase your risk of dying from the virus.
ONS data on the rate of deaths per 100,000 people by occupation groups clearly indicates that people in low-paid jobs are more likely to die from Covid-19.
The data is divided into male and female. A man working in an ‘elementary occupation’ is over twice as likely to have died from coronavirus than the average male worker, and over four-times as likely as a man working in ‘professional occupations’. In some specific occupations, such as security guard, taxi driver, chef and care worker, a male worker is over three-times as likely as the average to have died from coronavirus.
The mortality rate is also much higher in the most deprived areas of the country . Data covering March to mid-April shows that the mortality rate in the most deprived areas of England is double that of the least deprived areas (55.1 deaths per 100,000 people compared with 25.3 deaths per 100,000 people).
It's not hard to understand why this is happening. Low-paid workers are much more likely to be going out to work as normal right now, and much less likely to get decent sick pay if they fall ill. When you live pay check to pay check, you just can’t afford to stay home and wait out this crisis.
The impact of Covid-19 doesn’t just vary by occupation and deprivation, but also by race. People from BME backgrounds are more likely to be in intensive care with the virus and are disproportionately dying from it .
As we wrote in a blogpost last month , while we do not yet know the exact reason for this, we do know that BME people face entrenched structural racism in the labour market.
They are more likely to be living in overcrowded accommodation, less likely to have access to good healthcare, and more likely to be in high-risk jobs.
The financial impact of coronavirus will not be felt equally across the labour market. The hardest hit will be those who can’t work from home, those in low-paid work, and those in industries most likely to be furloughed. And it’s important to stress that these groups often intersect.
The government must act urgently to prevent this. It should immediately raise the rate of statutory sick pay to the equivalent of a week’s real living wage to ensure that nobody is pushed into debt because they took time off when sick.
It also needs to address precarity in the labour market by banning zero-hours contracts, ending bogus self-employment, and introducing a £10 minimum wage so that everyone in work is paid enough to live on.
And low-paid workers urgently need a range of emergency measures to make our benefits system fit for purpose. These include raising the basic Universal Credit payment (as well as the equivalent legacy benefits payment) to £260 and scrapping the five-week wait for first payment.
Going forward, unions will fight against the inevitable calls for austerity.
We’ve already seen rumours of public sector pay freezes, framed as a tough choice that must be made. But another bout of austerity will just cause further damage to those already hit by the pandemic and the preceding decade of bad economic policy.
Instead, we must demand an ambitious new jobs guarantee to avoid an unemployment crisis, investment to deliver decent public services, and the replacement of Universal Credit with a more generous, less punitive system.
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