ONS statistics show that, due to the furlough scheme, over two million employees were paid below the National Minimum Wage and National Living Wage in April 2020.
A new report released by the Office for National Statistics (ONS) reveals that just over two million jobs were paying less than the National Living Wage and National Minimum Wage as a result of employees on furlough. This roughly affected 7.2 per cent of jobs in the UK.
This was a direct result of the furlough scheme (officially called the Coronavirus Job Retention Scheme) which saw the Government funding 80 per cent of wages, up to a maximum of £2,500 a month. Employers were allowed to top up wages to their normal levels but were not required to, leading to some employees earning less than the national threshold.
The jobs that did not see their employer top up their wages were generally in the bottom 10 per cent of the pay distribution.
In addition, employees earning less (specifically less than £8.72) were also over five times more likely to see their job furloughed with reduced pay in comparison to other workers. Similarly, the lowest paying part-time jobs were also most likely to see a reduced hourly pay during this time. Conversely, the highest paying part-time jobs have seen a larger hourly pay growth than in 2019, highlighting the disproportionate effects on those earning less.
Specifically, the groups that fall within this lowest earning bracket include young people (aged between 16 and 21) and those working within elementary occupations (including waiters, bar staff and labourers) and in the food and accommodation services industry.
Frances O’Grady, General Secretary of the Trades Union Congress (TUC), made this statement to the Guardian:
[The Government] must fix the furlough scheme to ensure that no one is paid less than the minimum wage. Low-paid and younger workers have been hit hardest during this pandemic. Many on furlough have not had their incomes topped up by employers and have been forced to get by on less. That is not right. No-one should be earning lower than the national minimum wage – especially in the middle of a crisis.
Nye Cominetti, Senior Economist at the Resolution Foundation, a think-tank, said:
Young people and low-paid workers in customer-facing roles, such as hospitality and leisure, were hit hard during the first lockdown, and are likely to be hit hardest again during the coming lockdown too.
Given the scale of the economic shock facing Britain, today’s data also confirms how much of a living standards lifeline the Job Retention Scheme is for millions of often low-paid staff.
But furloughing can’t completely shield workers from the effects of the crisis. With many employers unable to top up staff wages, around two million workers were paid less than the legal minimum wage last April.
That’s still a lot more that they would have received had they lost their jobs altogether, but it’s a sobering reminder of just how important our wider social security safety net is – and why it should be strengthened, not cut back next April, as the Covid crisis continues into 2021.
*These statistics were taken from the ONS’s November 2020 Report entitled ‘Low and High Pay in the UK: 2020’.