NEW POLLING published by the TUC finds that low earners are more likely than middle and higher earners to have been forced to cut spending and take on debt during the pandemic.

The poll findings (conducted for the TUC by BritainThinks) come as the TUC publishes its budget submission which calls on the UK Chancellor to improve pandemic support for low- paid workers and to invest in job protection and creation to prevent an unemployment crisis following the pandemic.

Over a third (37 per cent) of workers said that their household had suffered a reduction in disposable income since the pandemic began.

This rises to half (50 per cent) for workers with annual earnings below £15,000, while it is just three in ten (29 per cent) for workers earning more than £50,000. The lowest earners are also the most likely to have had to reduce spending and take on debt.

The TUC says that low-paid workers have been worse affected because:

  • Insecure work: Low paid workers are often employed on terms such as zero-hours contracts, which give them no protection when their hours of work are cut back.
  • Household budget flexibility: Workers who are already struggling on low pay have much less flexibility than middle and higher earners to reduce spending and avoid debt.
  • Hard-hit sectors: Hospitality, leisure and non-essential retail have had by far the highest rates of furlough. Both sectors have large numbers of low-paid workers.
  • Remote working: Middle and high wage earners are more likely to have jobs that can be done from home, meaning they can avoid the need to be furloughed and may also make savings such as their usual commuting costs.
  • Furlough is protecting incomes but may pay less than the minimum wage: The job retention scheme does not have a floor, meaning that some workers receiving 80 per cent of their wages have fallen below the minimum wage. Two million employees were paid below the minimum wage in April 2020 (compared to 409,000 in April 2019) and the majority of these were on furlough at the time.

The TUC’s budget submission calls for a workers’ budget. The union body encourages the Chancellor to follow the recommendations of the OECD to make greater use of fiscal policy to support the economy.

By increasing support for working people and low-income households, the Chancellor would also be using fiscal policy to protect the economy and stimulate recovery.

TUC budget recommendations include:

  • Extending the job retention scheme (JRS) to the end of 2021.
  • A wage floor within JRS to prevent furlough pay falling below the minimum wage.
  • Permanent retention of the £20 per week increase in universal credit and an end to the five-week wait for new universal credit claimants to receive payment.
  • Increasing child benefit and child tax credit and removing the two-child limit.
  • Fixing statutory sick pay by raising it to £330 per week (to match the level of the real Living Wage) and by extending eligibility to the two million low-paid workers currently excluded from SSP.
  • Raising the national minimum wage to at least £10 per hour.

The full submission includes further recommendations to invest in job creation and boost skills – including retaining the £12 million Union Learning Fund, which supports 200,000 workplace learners annually.

TUC General Secretary Frances O’Grady said: “When a crisis hits, the most exposed should get the most protection. But many low-paid workers are struggling through the pandemic on less money and with higher costs. And they are falling into deeper poverty and debt.

“Good government means stepping in to help. The Chancellor should help by extending furlough to the end of the year, with a guarantee that support will never be less than minimum wage. And last year’s boost to universal credit should be kept – permanently.

“Many of these low earners are key workers who have kept our country going. We owe it to them to build a fairer economy after the pandemic. The Chancellor should give Britain a workers’ budget next month. It should be a plan for full employment, with decent pay and job security for every worker.”

* Read the full TUC Budget Submission here.

* Source: Trades Union Congress