Over the past 17 months, the closure of the 海角视频 economy which resulted in the largest economic slump for more than 300 years should, by all logical assumptions of the impact of such events, have resulted in massive negative changes in household incomes and unemployment.
Yet the annual report from the Institute of Fiscal Studies on “Living Standards, Poverty and Inequality in the 海角视频” shows that contrary to expectations, unemployment, real earnings growth, arrears on household bills and the use of foodbanks were actually at similar overall levels as compared to the pre-pandemic situation for the 海角视频 as a whole.
As the authors note, this is an “astonishing outcome” given what has happened to national income since March 2020 but also highlights the positive impact of government policies such as the furlough scheme and the uplift in Universal Credit during this period.
For example, there has been very little rise in those out of work with only 300,000 more people being unemployed or economically inactive in March 2021. In addition, the number of households where no one was working has only increased slightly over the same period.
However, if you dig deeper into the data, you do find that there are certain groups with high levels of poverty where there have been considerable increases in those that do not have a job. These include single-adult households without children who would not have a partner to support them and those from Bangladeshi and Pakistani backgrounds - which research had shown were likely to be single-earner households even prior to the pandemic – found it difficult to find work.
Indeed, the research shows that ethnic minorities suffered greater economic hardship during the pandemic with the proportion that who were in arrears on bills increasing from 12% in 2019 to 21% in April-May 2020 as compared to rise from 5% to 6% for white people over the same period.
These results would be largely expected given the socio-economic backgrounds of both groups but the most striking result from this research relates to the self-employed who lost all their work in the first lockdown which, in turn, resulted in a worsening of deprivation in the wake of the pandemic which has only partially receded since.
For example, in the last quarter of 2019 only 12% of self-employed workers were in a position where they had worked zero hours in the last week as compared to 11% of employees. Within six months, this gap had widened to the extent that 34% more self-employed workers (or 900,000 individuals) were working zero hours as compared to 24% of employees.
Most Read
Whilst there were government schemes that were generous to self-employed people, many were also excluded from such programmes of support. As a result, it is not surprising that the most conspicuous finding in the report relates to the difficulties faced during the pandemic by those self-employed who had lost all work in April 2020 and whose hardships have been largely ignored by politicians and policymakers.
Whilst only 2% of the self-employed had reported that they were behind on their bills in 2018, this had increased to 13% by May 2020 and to 15% by 2021. They also reported a big rise in experiencing financial difficulties from 16% pre-pandemic to 24% by May 2020 although this had declined to 11% by the beginning of this year.
Much of this financial situation was down to the delay in payments to the Self-Employment Income Support Scheme (SEISS) which only started arriving in late May 2020, leaving those working for themselves without any income in April and early May and exacerbating their financial difficulties.
Sign up to the BusinessLive Wales newsletter and follow us on LinkedIn
As well as an in-depth early morning newsletter, we will be sending out regular breaking news email alerts. To sign up to this service
And, follow us on to catch the latest stories and to network with the Welsh business community.
More relevantly, 36% of all self-employed workers were ineligible for the SEISS and, having lost their source of income during the lockdown, were not in the same position as many other businesses to obtain financial support from a range of other initiatives. As a result, rises in deprivation were considerably higher for the self-employed who lost work than for furloughed employees during the pandemic and this could result in longer term financial problems for both those individuals and their businesses.
Whilst the growth in the economy gathers pace as we move out of recession, it’s important for all parts of our labour force to be supported properly to build back better. Not only have a significant number of the self-employed not been properly supported during the pandemic but, more importantly, they and their families have been hit the hardest as a result.
Given this, there is surely an opportunity for both the 海角视频 and Welsh Government to look carefully at their recovery plans and focus on how they can support those self-employed workers who experienced the large increase in financial difficulties and deprivation at the start of the pandemic but who could and should play a major part in the economic recovery.