How has Covid-19 affected inequalities in employment status and income?

Employment status and income are important drivers for people’s overall wellbeing, affecting how we feel about life and whether we have the resources to invest in things that play a part in our wellbeing. Covid-19 had an enormous impact on the labour market with millions of people experiencing employment and/or income shock. 

Our new briefing paper summarises the evidence on the impacts to people’s employment status and income, particularly focussing on the inequality of these impacts. The data is taken from our new wellbeing framework Covid:WIRED, developed with Centre for Thriving Places which uses evidence published between March 2020 and May 2021 to identify the wellbeing inequalities within the UK and where they have been exacerbated or diminished.

Who was vulnerable to losing work?

Men 

Although early in the pandemic women were disproportionately impacted by sector shutdowns, by February 2021, longer-term data showed that women have fared better than men. This is because:

• Women were more likely to be key workers or be furloughed and also more likely to benefit from employment growth as the economy opened up. 
• Analysis by sector in May 2020 found that men were more likely to be impacted by shutdowns to construction. For some ethnic groups e.g. Bangladeshi and Pakistani men, the closure of hospitality has impacted more than 50% of this group. 

Those in precarious and low paid work

Those with the most precarious employment and less education were most likely to face the biggest economic shock: 

• Key workers and workers in shut down sectors are less likely to have savings.
• Those with less stable work relationships were more likely to lose their work. Within this group, BAME people were more likely to have precarious working conditions. 
• During the first lockdown, the low-paid were twice as likely to be on furlough or have had their hours reduced. 
• Those who are in work and in the deepest levels of poverty are more likely to have experienced furlough, reduced hours or wages, or lost their job. 
• The ability to work from home cushioned many job losses and those with higher wages were more likely to be able to work from home. 

Young people

• The highest rate of unemployment was amongst young people aged 18-24. 
• There was also the highest quarterly increase of young people not in education, employment or training since 2011, almost entirely driven by economically inactive men. 

BAME communities

Workers from Asian, Black and other ethnic origins were more likely to lose their jobs in shrinking sectors, and less likely to gain jobs in growing ones:

• Those from minority communities were less likely to have protection within workplaces. This is particularly the case for young Pakistani adults who are more likely to be working shifts or on a zero-hours contract, and Black Africans who are more likely to be at risk of unemployment.
• People with a vulnerable economic status are also more likely to have a partner who has relatively insecure work. Bangladeshi, black African and black Caribbean groups are less likely to be able to rely on savings to tide them through short periods of income loss.

Access to support systems

There is evidence that the effects of the Covid-19 specific support systems were not equally distributed:

• Although Universal Credit protected those in the bottom quintile from the impact of economic shocks, around half of Universal Credit claimants reported experiencing a severe financial strain.
• According to research from Peabody Housing 25% of residents had to wait longer than 5 weeks for the first payment, resulting in people going without essential items.
• There was a significant cohort of people who were eligible for Universal Credit and did not claim it due to perceptions of ineligibility, stigma and hassle. 
• Those who were self-employed were more likely to report reduced income, even if they received support from the Self-Employment Income Support Scheme. 
• There were also differences in who accessed in-work support – only one third of BME people were aware of Statutory Sick Pay being available from the first day of isolation.
• Those who were on furlough had better mental health than those in employment and those who were unemployed. 

Why do these findings matter for wellbeing?

The policies and support that were introduced to minimise the harmful impacts of the pandemic reduced many of the immediate impacts on employment stability and income for many citizens, but some fell through the cracks. 

This tended to be those who were already vulnerable in the labour market: 

• Those in low paid work
• Young people
• BAME communities
• Those in precarious employment 
• Those who are self-employed

As society and the economy starts to open, it is a chance to reflect on what was learnt in previous economic crises and ensure that these groups are prepared for future labour market shocks.

Tom MacInnes, Chief Analyst at Citizens Advice Bureau comments: 

“This review is timely for us in the way it shines a light on the distributional aspects of the changes we’ve seen. We know from our own data how young people have been affected – under 25s and 35s make up a bigger share of our advice clients now than pre pandemic – so matching that to other data around wellbeing helps us understand the needs of this group better.”