UK’s badly paid jobs leave workers vulnerable in the Covid-19 economy
• Employment rate was at record levels before the virus lockdown, but the lack of security means 8% have already lost their positions, study shows
The UK has record high employment and the lowest jobless rate since the 1970s. But the labour market — and many workers — are more vulnerable to the economic fallout from the coronavirus than those headline numbers suggest.
For one, pay growth has lagged behind other major economies, and wages are barely higher than they were before the financial crisis. Many more people now work for themselves and almost 1-million are on zero-hour contracts, with no guarantee of hours from week to week. Charities report continued problems with debt.
That’s the flip side of figures showing Britain created more than 3-million jobs over the past seven years, defying the headwinds since the 2016 Brexit referendum.
One figure last week starkly illustrated the pressure on households as the shutdown of the economy wreaks havoc on jobs and incomes. Almost 1million Britons have claimed universal credit welfare payments in the UK in the past two weeks, up from the 100,000 normally expected in that many days.
“The last 12 years have been characterised by record numbers in jobs, but there are these other dimensions, like very, very weak real wage growth,” said Stephen Machin, director of the London School of Economics (LSE) Centre for Economic Performance. “It seems like people in sectors involved with furloughing or even in less secure positions are going to be in serious trouble.”
Here’s a look at why many households will struggle, despite the tens of billions of pounds being spent by the government to help workers through the crisis.
Employment stood at a record high of 76.5% before the virus outbreak. One argument goes that companies chose to hire rather than invest in equipment because workers are easy to let go in a downturn.
About 8% of workers in employment a month ago have already lost their job due to coronavirus, and for those still in work, the expected probability of job loss in the next four months is more than 30%, according to research from the University of Oxford.
A feature of the past decade has been the rise of selfemployment, including gig economy workers. About 15% of workers now work for themselves, most of them operating alone. Many earn little and lack access to the traditional safety net, including sick pay and the national minimum wage. The self-employed have suffered more than employees in terms of real income losses, LSE research shows.
Britain has had the weakest pay growth of any Group of Seven countries since the financial crisis, a reflection of feeble productivity growth. Among 35 Organisation for Economic Co-operation and
Development countries, only Mexico and Greece fared worse.
UK workers were only just starting to recover from the longest pay downturn in more than two centuries before the virus outbreak.
The lockdown is having the biggest effect on the young, lowpaid and female workers, according to new research from the Institute for Fiscal Studies.
Many low-income households will struggle to make ends meet. Citizens Advice — a charity that provides guidance on jobs, welfare and debt management — had more than 2-million website views between March 22 and March 28, its busiest week yet.
Its most-visited page across that period? Advice on what to do if you can’t pay your bills due to coronavirus.
Insecure employment may suit those who want flexibility, but many have little choice. The proportion of part-time workers who want a full-time job but can’t find one remains higher than before the financial crisis.
“I’m sure if anyone was asked that now, there would be a huge spike in the numbers,” Machin said.
A generation ago, poverty was largely confined to pensioners and the unemployed. No longer. More than half of those seeking advice from the debt charity StepChange in 2019 were in some form of work.
Wage stagnation, rising housing costs and government spending cuts have exacted a heavy toll. Even before the virus outbreak, StepChange was fielding the equivalent of one call every 49 seconds, while the average client had just £89 left at the end of each month.
“We had seen poverty start to increase again, and in particular for workers,” said Dave Innes, head of economics at the Joseph Rowntree Foundation, an anti-poverty organisation. “We’re heading into this in a far-from-ideal situation across society.”