Two million in UK paid below minimum wage since Covid pandemic began

Credit offers

The number of people in the UK earning below the minimum wage has risen more than fivefold to 2 million since the start of the coronavirus pandemic, according to official figures, as the lowest-paid workers in Britain suffer the most financial damage.

The Office for National Statistics said there were 2,043,000 jobs where employees aged 16 or over were paid below the legal minimum in April 2020, more than four times the 409,000 jobs a year earlier.

Highlighting the scale of the financial damage for the poorest in society during the first lockdown, it said the lowest-paying jobs were more than five times more likely to be furloughed with reduced pay.

The government statistics agency said the figures did not necessarily confirm a sharp rise in non-compliance with the minimum wage, because new rates were launched in April at the time of its survey and “many employees were furloughed and a pay rise was not reasonable”. The main national living wage for over-25s went up to £8.72 an hour, while the levels for younger adults also increased.

However, the ONS said more than half of jobs in the bottom 10th of earners in Britain were furloughed without a top-up in wages from their employer, compared with less than 10% in every other pay group – in a sign of the disproportionate hit to incomes for low-paid staff.

The snapshot from April suggests firms used the 80% wage subsidy provided by the government’s flagship scheme for the lowest-paid staff, but were more likely to go above and beyond for higher-paid staff to top up and pay 100% of usual wages.

  What are your options if you need a mortgage when you're over 80?

The figures come as pressure intensifies on the chancellor, Rishi Sunak, to increase the wage subsidy on the furlough replacement scheme, which is due to launch after the English lockdown next month at 67% of pay rather than 80%.

Apply for a credit card

Frances O’Grady, the general secretary of the TUC, said the government could not stand by while millions were plunged into financial hardship. “It must fix the furlough scheme to ensure that no one is paid less than the minimum wage,” she said.

“Low-paid and younger workers have been hit hardest during this pandemic. Many on furlough have not had their incomes topped up by employers and have been forced to get by on less. That is not right.”

Revealing the disproportionate impact for some workers in society, while others see fewer changes as their employers provide furlough top-ups, the ONS said young and low-paid workers in the hospitality sector were most likely to have suffered a fall in pay.

Almost a quarter of 18- to 21-year-olds were furloughed with no top-up from their employer, compared with 9% of 40- to 59-year-olds. As many as 39% in hospitality were in the same position, compared with as few as 3% in professional jobs, where firms paid more staff above the furlough minimum.

Despite the scale of the impact for low-paid workers, the figures do show the furlough scheme prevented much worse damage. The ONS said the number of paid hours across all sectors fell by 1.5% compared with 2019, even though the number of hours actually worked plunged by 20%.

  Experience: my dream flat became a nightmare

Sign up to the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk

The ONS also said the gender pay gap fell in 2020 from a year ago, and that there was little early evidence that Covid had affected the gap – despite the difference between pay for men and women remaining high at 15.5%. It had been 17.4% in 2019.

Nye Cominetti, a senior economist at the Resolution Foundation, said the evidence that young people and low-paid workers in customer-facing roles suffered the most during the first lockdown was a worrying sign for the second wave.

“It’s a sobering reminder of just how important our wider social security safety net is – and why it should strengthened, not cut back next April, as the Covid crisis continues into 2021,” he said.