If the government is serious about coronavirus, it will give vulnerable workers pay they can actually live on

Coronavirus has exposed growing divisions in the working world. Structural problems in the UK’s labour market are at risk of exacerbating the impact of Covid-19 on frontline services and care workers and must now be addressed in a comprehensive package.

The budget gave the biggest fiscal boost to the UK economy in 30 years. On Tuesday, the chancellor announced additional financial measures valued at £330bn aimed at small businesses caught in the teeth of the coronavirus lockdown.

This boost is welcome but Covid-19 has exposed some significant gaps in the level of security and well-being afforded to different classes of worker. More than 2 million people in the UK, most of whom are self-employed or work on insecure contracts, are excluded from the statutory pay scheme.

Direct, comprehensive support for our workforce is integral to mitigating profound effects of Covid-19 on the economy. Analysis at the Institute for the Future of Work shows that raising the floor of basic protection – including sick pay – for working people would support the country’s economic resilience.

Coronavirus has revealed the inequality between "good" jobs which are well-paid, secure, and fulfilling, and insecure, low-paid, contract work in the service and care sectors which is not even covered by sick pay.

The UK has had disproportionate growth in self-employed and non-standard employment. One in seven people in the UK does not have an employment contract with a sick pay scheme that beats the £94.25 per week statutory minimum.

Conversely, job opportunities for mid-pay and skilled managerial and operative work have declined. This has gone hand-in-glove with a rise in relative inequality of income and wages across the UK, with the most recent ONS analysis showing incomes for the poorest households falling again by over 4 per cent.

Now justified by current events is an increased sense of social and economic insecurity felt by those in work, as found in the Institute for the Future of Work's research.

It’s a double blow that many of the workers at the sharp end of the UK’s labour polarisation are required to have higher levels of human contact and cannot do their jobs remotely. Many service sector and care workers must continue in work where social distancing is impossible. They’re needed more than ever to sell or deliver food and medicine, or to tend to the young and elderly, but this will increase risk of early exposure to Covid-19.

Worse, these lower-paid workers are themselves more likely to live in areas with lower levels of economic and health resource. It’s not a coincidence that 81 per cent of low-paid caring, leisure and "other service" occupations are done by women.

It’s the life expectancy of the poorest 10 per cent of women that has taken the biggest hit, as the Health Foundation’s recent Marmot Anniversary Review highlighted. It’s not right, or helpful, that the UK’s most vulnerable workers are being forced to choose between health and income.

Taken together, this means the systematic risk of the pandemic to a low-paid, contract retail or care worker and family is likely to be higher than to a highly-paid, educated office worker who can work remotely. For these workers, the impact of Covid-19 may be faster, or more intense and enduring. And once struck, sick pay is less likely.

The government must act quickly.

First, they should introduce sick pay for all, including those working on insecure contracts. Like Norway, this should ideally extend to full pay rate for 20 days, with the self-employed receiving 80 per cent of their average income. The UK’s minimum pay of £94.24 should be raised to reflect a reasonable minimum living wage.

Carers of Covid-19 patients, including unpaid carers, should receive the living wage. New risks mean that, as a society, we need to revalue caring work involving high levels of human contact.

Covid-19 shows up the particular proximity of work to health, as challenges such as sick pay demand a co-ordinated, cross-department approach to maximise the chance of a swift recovery. Unions and business must work with the government to develop a strategy to address the root causes of the inequalities that are hitting us now as a key part of shaping the UK’s future of work.

Finally, health and well-being should be elevated to be the primary goal for the economy. Covid-19 has brought home the truth that measurements of health and wellbeing, not GDP, are the gauges that determine our success.

As we manage and overcome Covid-19, mapping the geography of good work and health together are the best way to identify priorities and focus new resources that will create a country better prepared and more resilient in the face of the upheavals ahead.

Sir Christopher Pissarides is chair of the Institute for the Future of Work and Regius Professor of Economics at the LSE and Anna Thomas is director of the Institute for the Future of Work