Lowest paid most likely to have lost income and increased debt since start of Covid-19 pandemic

New TUC survey finds that half of workers with income of less than £15,000 experienced fall in income, while three-in-ten reported increased debt

The lowest paid are the most likely to have lost income and to have increased debt since the start of the Covid-19 pandemic, according to new research from the TUC.

Setting out the findings of a November 2020 survey of more than 2,000 workers in England and Wales, the TUC highlights that while over a third (37 per cent) of respondents said that their household had suffered a reduction in disposable income since the pandemic began, this rose to half (50 per cent) for workers with annual earnings below £15,000, as compared to three-in-ten (29 per cent) of those who earn more than £50,000 per year.

In addition, the TUC says that a rise in debt during the pandemic was particularly noticeable among -

• low-paid workers - three-in-ten workers (29 per cent) earning less than £15,000 per year reported higher levels of debt as a result of the pandemic, compared to one-in-five in other income groups;
• furloughed workers and those recently made redundant - with 35 per cent of furloughed workers and 46 per cent of those recently made redundant having experienced high levels of debt, compared to 19 per cent of those working as normal;
• those in receipt of benefits - 37 per cent of workers receiving social security benefits reported an increase debt due to the pandemic, compared to 17 per cent of those not in receipt of benefits; and
• disabled workers - four-in-ten workers (38 per cent) whose day-to-day activities are limited a lot due to a disability reported an increase in levels of debt, compared to one-in-five non-disabled workers.

Commenting on the figures, the TUC says that -

'The government must take urgent action to avoid a worsening household debt crisis that is already hitting people hard and looks set to leave many struggling with debt and repayments for years to come. This is important both in terms of helping those who are struggling and helping the economy to recover. Any recovery will depend on people being able, and feeling confident, to spend. This is unlikely to be the case if people are burdened by debt repayments.

Government must help to prevent the crisis worsening by protecting jobs, increasing the minimum wage, overhauling our benefits system to make it fit for purpose, and increasing statutory sick pay. As well as this, it must provide support for those already in debt through a wider package of support for struggling households.'

For more information, see The impact of the pandemic on household finances from tuc.org.uk