New research finds that low-paid workers have been worst affected throughout the pandemic and still face the risk of unemployment and high job insecurity after the furlough scheme ends. 

A report by Resolution Foundation, an independent think-tank, examines the impact of the crisis on low-paid workers and their prospects during both the reopening of the economy and the UK’s post-pandemic labour market.

According to the research, low-paid workers were three times as likely to have either lost their job, been furloughed by their employer or faced a cut to their hours or pay compared to the highest earners.

While the outlook for these workers is steadily improving with the re-opening of the economy, the think-tank has warned that the ending of the furlough scheme could have the worst impact on this group.

The most recent data released by the HMRC showed that employees within the wholesale and retail sector accounted for 602,800 employments on furlough at 30 April 2021. Similarly, accommodation and food services workers made up 932,600 furloughed employments at the end of the same period.

This also puts the job security of low-paid workers at risk, the report warns. Comparing the trends from the 2008-09 financial recession, the proportion of low-paid workers doing insecure work (such as Zero-Hours Contracts or agency work) rose to almost one-in-four.

As such, the report calls for a new post-pandemic contract for low-paid workers, including:

  • Ending low pay by the middle of the decade by recommitting to a higher National Living Wage.
  • Boosting job security through new rights to a regular contract and sufficient notice for shift changes.
  • Preventing underpayment of the minimum wage, pension contributions and holiday pay with a single enforcement body.

Nye Cominetti, Senior Economist at the Resolution Foundation, said:

Low-paid workers have been at the heart of the economic crisis. In the run-up to the reopening of the economy, one-in-five workers had either lost their jobs, been put on furlough, or taken a major pay hit.

Fortunately, low-paid workers also look set to be at the heart of the recovery by coming off furlough in huge numbers and returning to their previous jobs.

However, big risks still lie ahead. Low-paid workers are most at risk from the expected rise in unemployment later this year, which also risks causing greater job insecurity.

The Government can salute the vital contribution of Britain’s low-paid workers by offering them a new post-pandemic settlement – from better pay via a higher National Living Wage to greater security of working hours, and proper enforcement to tackle labour market abuses.

*This research is documented in the Resolution Foundation’s ‘Low Pay Britain’ report, published in June 2021.