The UK government’s plans to stop furlough pay and cut temporary benefits could push many workers into low-paid, insecure jobs.

A fifth of workers, 3.7m people, are in low-paid and insecure employment. These workers were four times more likely to lose their jobs during the pandemic than those on permanent contracts, according to new research by the Living Wage Foundation.

The report, published today, said the UK has "entered a new crisis with structurally high levels of work insecurity" remaining unchanged over a decade on from the financial crash.

Angela Rayner, Labour’s deputy leader and Shadow Secretary of State for the Future of Work, said the report was proof that the UK's economic model is broken.

“A job should provide security, dignity and a proper wage that you can support your family on," she said.  

Key workers

The furlough scheme, which the government intends to end in September, has supported the incomes of millions of workers whose jobs were affected by the pandemic, paying up to 80% of their wages.

Workers in accommodation and food services, arts and entertainment – which are all areas in which jobs are very insecure – are most at risk of sliding into poverty when the government pulls the pandemic safety net away.  

Many of those celebrated as 'key workers' during the pandemic, including social care workers, cleaners and supermarket staff, are already on insecure contracts and low pay. 

The report also highlighted how ethnic minority communities are at a greater risk of work insecurity than white workers. As high as 41% of Bangladeshi workers experience work insecurity; the same is true for 33% of Pakistani workers and 28% of Black workers.

The government is also planning to end a £20-a-week uplift to benefit payments this September. It is estimated that the increase, which was introduced at the start of the pandemic, helped 700,000 people stay above the poverty line.

While Prime Minister Boris Johnson has said he would choose higher-paid jobs over more welfare, members of his own party have taken an opposite view. In July, seven senior Tories, including Iain Duncan Smith, who introduced the Universal Credit policy, wrote to the Chancellor, Rishi Sunak, asking him to maintain the rise.

For many, Johnson’s choice between work and welfare is not available. More than a third of those receiving universal credit are in work and a fifth have “no requirements to work”, for example, because they are too ill or have a baby under the age of one.

Labour’s Shadow Secretary of State for Work and Pensions, Jonathan Reynolds, said the cut would "hit the lowest-paid hardest".

‘Real danger’

Graham Griffiths, director of the Living Wage Foundation, said insecure work has left millions of people struggling to keep their heads above water.

“There is a real danger that as we look to recover from the huge damage of the pandemic, we fail to recognise the vital need for an economy built on jobs with decent pay and secure hours,” Griffiths said. 

“This is what we need for a modern, dynamic economy that delivers stability to workers, families and businesses.” 

The Living Wage Foundation calculates a voluntary ‘living wage’ for employers that is based on the minimum required to meet everyday needs. It is currently set at £9.50 across the UK and £10.85 in London. The government’s statutory minimum wage is £8.91.

This week, Labour announced that it would give all workers the same benefits and rights from day one of their jobs, regardless of their employment status, if it wins the next general election.

The report comes a day after the government was slammed for its "pathetic" enforcement of minimum wage laws after openDemocracy revealed that just six employers have been prosecuted for underpaying their employees.

openDemocracy also found that 58 companies that were ‘named and shamed’ for failing to pay the national minimum wage have claimed millions in furlough payments through the government’s job retention scheme.