The impact of the pandemic on work, income and living standards

Introduction

As an economic crisis, the COVID-19 pandemic acted mainly through the labour market. In 2020, more people were in work than had ever been recorded before (see Chapter 2). A total of 62% of HRPs in England were in work in 2019/20, and thus at least this many households were exposed to the effects of the pandemic on work and work incomes.

Changes in employment income through furlough, redundancy and short hours were the culprit in 83% of cases of income loss in England November/December 2020 to April/May 2021. Pandemic work income loss was concentrated among those in the worst-hit sectors, in roles that could not be done at home, and in the places where these jobs were concentrated.

Across the world, countries like the UK with high incomes and good credit were able to make dramatic responses. Tooze argued that policymakers ‘drew directly on the lessons of 2008’ (Chapter 1). In March 2020, the UK government invented whole new jobs support and benefits policies. Hale et al’s index rated the UK’s economic support policies as the fourth most generous in the EU plus the UK, after Cyprus, Ireland and Austria, over January 2020 to November 2021. While they operated, these policies compensated for weaknesses in the normal welfare safety net (see Chapter 2) and effectively increased its generosity slightly.

By May 2020, 45% of UK individuals were in households that had lost at least a tenth of their income. In response, 26% of all individuals used their own savings and 12% received help from friends and family, demonstrating the significance of family in emergency welfare (see Chapter 2). In prepandemic times, research found that claimants said that claiming was a last resort due to the difficult and unpleasant process. During the pandemic, only a minority used emergency policy supports: 8% applied for UC and 8% for the Self-Employed Support Scheme (SEISS), 8% applied for a mortgage holiday and 8% borrowed, while 2% used a food bank. A small group cut housing costs by moving in with others (see Chapter 4).