- Report warns Universal Credit and planned National Insurance rise are putting pressure on low-paid workers, report warns.
- 45% of supermarket workers and 31% of care workers are paid less than the benchmark for decent living standards, study finds.
- Largest study of key workers during the pandemic calls for reforms to sick pay, better childcare and decent mental health support.
The government should focus on increasing the pay of supermarket and care workers to boost productivity, offset recent tax and benefit changes, and help ‘level-up’, according to the largest study of key workers in the pandemic.
Key Workers In The Pandemic — an 18-month study carried out by the RSA with the Standard Life Foundation and Trust for London — tracked key workers’ physical, mental and financial wellbeing during the pandemic via focus groups, interviews and a regular YouGov survey.
It finds that the UK’s 10.5 million key workers — a third of the UK workforce — face a “security trap”: a trade-off between their health and their financial well-being. Many, especially the low-paid, find themselves trading off their health to stay in their job.
The report calls for a new deal for key workers, including paying all essential workers the Real Living Wage (£9.50 per hour, or £10.85 in London), more childcare and better mental health support.
On the physical and mental health side, the researchers find:
- At the height of the pandemic, 65% of key workers were struggling with their mental health, rising to 73% of NHS workers.
- In the health and care sectors, stress and workloads were the top causes for concern, while for school, nursery, and supermarket, it was a fear of catching the virus.
- One-in-five key workers found it difficult to take time off if unwell, rising to one-in-four care workers and nearly 40% of NHS staff.
But the labour market is failing to deliver economic security for these workers, the report notes:
- Around 410,000 supermarket workers (45% of the total) and 393,000 care workers (31% of the total) are paid less than the Real Living Wage.
- Women, ethnic minorities, single earner households, Londoners, and renters were disproportionately less likely to be able to afford an unexpected bill of £100.
- Insecure work pushed many to work when unwell. More than one-fifth of those who said they would struggle to pay an unexpected £100 bill also said they failed to isolate when they should have, compared to just one-tenth of the whole sample. Of ethnic minority key workers, 18 percent were unable to isolate when they should have, higher than the national average.
But the welfare system has failed to help all key workers:
- For some, Universal Credit failed to help them into work, especially women with childcare. One interviewee, an healthcare worker on a low-income, told researchers that “if I work more and earn £1,300 a month, I get about £300 in Universal Credit. If I work less and earn £600, then I get £700/£800 and I do not pay as much for childcare”.
- 660,000 key workers are set to lose their £20 per week Universal Credit lifeline later this month, when the planned uplift ends, according to RSA calculations.
- The recently announced 1.25 percentage point increase in National Insurance rise will cost the average full-time care worker an extra £141 per year, a supermarket worker £148 per year, a van driver £164 per year, and for a nurse will be an extra £304 per year. There is, at present, no guarantee that the money raised will be spent on higher wages.
To address this, the report calls for all key workers to be paid the Real Living Wage, especially in under-unionised private sector roles.
For the 393,000 care workers who are currently paid less than this level, this policy would cost £455 million for the care sector, and leave a typical worker £990 per year better-off pre-tax, rising to £2,200 in the capital.
For the 410,000 supermarket workers paid less than this level, it would cost supermarkets £262 million a year and leave the typical worker £410 better off.
The RSA says that this would have a benefit on wider economic productivity and raise wages for non-key workers too.
Conservative Party voters back the move and see increasing the Real Living Wage, and better enforcement, as their top priorities for improving employment in the UK, the report notes.
The study also calls for the UK government to:
- Introduce enhanced Statutory Sick Pay to 60% of the wages.
- Support mental health in the NHS and relieve pressure on the health system by working to increase staffing numbers, meeting the 108,000 full- time equivalent (FTE) nurse shortfall expected by 2028/29.
- Make it a specific offence to abuse retail staff, affording them the same protections as other key workers.
- Support working parents and reduce gender inequality in the workplace by treating childcare as infrastructure, targeting childcare subsidies more effectively and making childcare affordable and flexible for all by extending provision beyond the nine-to-five working week.
Alan Lockey, head of the RSA’s future of work programme, said:
“We need to focus on good work for everyone if we're to level-up.
“Boosting the incomes of the lowest-paid key workers would be good for those employees, good for UK productivity, and good for the workforce as a whole as this would like raise wages across the board.
“We also need to see a ‘new deal’ for our key worker heroes, including better childcare, decent sick pay and better mental health support, especially in the NHS.”
Mubin Haq, Chief Executive of Standard Life Foundation, said:
“The financial security of many key workers improved during the pandemic as we relied heavily on them to provide essential services. However, pre-existing challenges remain. As a society we clearly value our key workers but for many this has not translated into the pay and conditions they fully deserve. A new deal is needed which employers and government must address, if we are to avoid further labour shortages already witnessed in some sectors.”
Manny Hothi, Chief Executive of Trust for London, said:
“London’s key workers rank highly among the capital’s poorest paid workers, and on top of this have made huge sacrifices to their personal lives for work during the pandemic. They consistently cite money worries and COVID-related health risks at work as drivers for poor mental health, more than any other region of the UK. People should never have to choose between health and financial security, and this report shows how vital it is for all key workers to be paid the Real Living Wage. Paying fair wages that reflect what people need to make ends meet makes sense not just on a human level, but also for businesses and the economy.”
