Over 11 million workers may face destitution due to gaps in the government’s Coronavirus income protection plans

More than 11 million workers could face destitution due to the lack of support available to them in the government’s Coronavirus income protection plans, a new analysis published by the Institute of Employment Rights (IER) has shown.

Lord John Hendy QC, author of the new report and Chair of the IER – an independent think tank – warns that government reassurance that agency workers and those on zero-hours contracts will be covered by its financial support schemes may be misguided.

There remains a financial incentive for employers to cut – rather than furlough – casualised labour, he explains. Further, millions of self-employed people, those holding down two jobs, and those with caring responsibilities could also fall through the gaps.

Key points from the briefing

• Up to 9 million workers may lose out on Statutory Sick Pay

  This includes approximately 2 million people paid less than the Lower Earnings Limit of £118 per week and therefore not eligible for Statutory Sick Pay, 5 million limb (b) workers (an employment status that includes ‘gig economy’ workers such as Uber drivers), 1 million agency workers and 1 million people on zero-hours contracts.

Further, those who are entitled to Statutory Sick Pay are likely to struggle to make ends meet, as the rate is set at less than 30% of the National Living Wage.

• Over 7 million workers may not be eligible for the Job Retention Scheme

  Around 5 million limb (b) workers, almost 1 million people on zero-hours contracts and around 1 million agency workers are either excluded from the scheme or unlikely to be furloughed. A significant gap also exists for those forced to stay out of work to care for people who would otherwise be provided for by nurseries, schools, day care centres and other public services. While it is possible for these workers to be furloughed, it is unlikely they will be.

Further, even for those who do receive 80% of their wages through the Job Retention Scheme, there is nothing to prevent the amount they are paid from falling below the National Minimum Wage.

• At least 1.2m have lost their jobs and are stuck in the Universal Credit backlog

  The latest figures show that 1.2 million people have applied for Universal Credit in the last three weeks. Although employers have the opportunity to rehire workers sacked since 28 February in order to apply for the Job Retention Scheme, there is little incentive for them to do so. The long delays in receiving Universal Credit payments has been well-publicised, and it is likely the wait will only get longer as the government struggles to accommodate this sudden increase in workload.

• Over 1.25m self-employed people could go bust before they receive help

  The Self-Employed Income Support Scheme will not pay out until June, but one in four self-employed people do not have a high enough income to support themselves until then and 15% cannot last one month. According to the latest figures from the Office for National Statistics, 5.03 million people were self-employed in the first quarter of 2020, representing 15.3% of all people in employment.

• Those with two jobs could face significant income losses

  Hard cut-offs to the Self-Employed Income Support Scheme mean that those who supplement a part-time job through self-employment risk losing a significant amount of their income. If a self-employed person earns less than 50% of their total income working on their own behalf they are not eligible.

• Two-thirds of households cannot survive a pause in their pay

  Before the crisis, only one in three households had the savings available to cope with an emergency, and household debt averaged at 98% of household income (rising even higher for lower earners).

Lord John Hendy QC, Chair of the IER and author of the report, said:

“The government’s Job Retention Scheme and related Self-Employed Income Support Scheme is a welcome safety net for millions in their time of need. However, government reassurances that the millions of casual workers, as well as low-income self-employed people will be eligible for support may be misguided.

The precariously employed or low-income people that were the most at risk for financial hardship before the Coronavirus crisis are still the most at risk of ruin today.”

Andy McDonald, Shadow Secretary for Employment Rights and Protections, said:

“We welcome and support the government’s aim to help those who have lost their income due to the Coronavirus crisis, and will continue to offer our input to help prevent the people identified in this report from falling through the cracks.

But when this tragic period in our lives has come to an end, we must take stock. Through stronger labour laws and a re-examination of the way our economy functions, we can help those hit hardest by this pandemic survive the coming recession. After all, many of those workers branded ‘low-skilled’ – and low-paid to suit – are the people currently risking their lives to save others.”

Carolyn Jones, Director of the IER, said:

“For the past four years, the IER has been crafting a framework of labour law fit for the 21st century. Our Manifesto for Labour Law project has outlined the problems and proposes necessary changes to the UK’s failed model, which, if implemented, would go some way to bringing our laws up to international standards. Little did we realise that the UK’s existing laws would be tested so quickly and so thoroughly, with such devastating impact. The weaknesses in the UK’s laws cannot be allowed to continue. We need a new, post-pandemic settlement in labour law.”

ENDS

Notes to editors
Contact Sarah Glenister with any queries at sarah@ier.org.uk

About the Institute of Employment Rights
The IER exists to inform the debate around trade union rights and labour law by providing information, critical analysis, and policy ideas through our network of academics, researchers and lawyers.

We were established in February 1989 as an independent organisation to act as a focal point for the spread of new ideas in the field of labour law. In 1994 the Institute became a registered charity.