Pandemic truths 2: How Covid-19 shone a spotlight on the warped values of our current way of life
by Andrew Webster
‘Perhaps the easiest way of making a town’s acquaintance is to ascertain how the people in it work, how they love, and how they die.’
Albert Camus, The Plague
This is the second in a series of articles in which Andrew Webster reflects on ‘12 tough truths’ that have always been known, but which have been thrown into sharp relief by the pandemic. This article considers income and welfare. Click here to read the first in the series.
Truth 3: People’s income bears no relation to the value of the work they do
Some of the key workers we have been applauding are well paid (doctors, for example, are better rewarded in the UK than in many other European countries); most are not. Care workers, delivery drivers, refuse collectors, caterers and farmers rank among the most poorly paid in our economy. Some better rewarded people have been very busy in the pandemic, for example tech developers and engineers making sure that digital business could expand sustainably. Some of the best-paid people have had very little to do beyond considering how much to ask the government for through the furlough scheme to meet their companies’ wage bills. Some, like those running businesses that can’t operate during the pandemic, airlines for example, have devoted their energies to taking an unexpected opportunity to reduce their wage bill by cutting staff, cutting salaries and removing benefits. The truth is, as even the healthcare system eloquently demonstrates, that people’s pay is driven by status as much as value. High-status individuals (expensively educated, male, white, middle-aged) get well rewarded while most of those doing the truly valuable work (less educated, BAME, female, all ages) get much less.
Growing inequality of rewards has been mitigated by the national minimum wage, ensuring that everyone who is employed receives a guaranteed rate per hour. Beyond that the government has not sought to intervene in the labour market. There are some political quirks in the public sector – people who run public services, for example, are not expected to earn more than the prime minister’s basic salary of £158,000. The market has generated better rewards for full-time employees in sectors that have few part-timers. At the same time the number of part-time, zero-hours contract and self-employed workers has increased, creating income insecurity and diminishing the effectiveness of the national minimum wage and local living wage initiatives.
Disposable income 2018-19
New research by the Resolution Foundation has found that those in lower-earning occupations have suffered a disproportionate adverse impact from the pandemic, in terms of both employment and pay.
There are potential changes in public policy that could bridge the gap between job value and reward. Government and local councils could stipulate higher wages and secure employment when awarding contracts for services such as home care, refuse collection and road maintenance. The NHS could increase pay for lower-paid staff. However, these market-based interventions place the cost of more equal pay solely on the taxpayer, and there could be regulatory problems in the event of mergers and acquisitions among suppliers.
The truth is that if rewards are not generated by the value of the work, then the market cannot solve the problem. Society has to find a new and better way of distributing income that reflects values and is sustainable. Many see a Universal Basic Income as a key part of this solution. Like a minimum wage, it can be seen as a mechanism to eliminate poverty and improve choice.
Another approach would be to build on the value attached to ‘key workers’ by properly defining the roles and guaranteeing a good income to all ‘key workers’. The average disposable income in 2019 was just under £36,000. So, imagine that the law guaranteed every key worker 110 per cent of the 2019 average income or £40,000. This would ensure that all key workers are in the upper half of the earnings scale. They would of course pay more tax (but not higher-rate tax, which starts at £50,000) but that would not meet the full cost. So, to raise extra revenue without penalising individuals, corporation tax could be increased for firms with the most unequal pay scales. In this way, all employers would have an incentive to maximise pay equality. For example, if much higher rates of corporation tax kicked in when the top-paid person earned four times the lowest, then a scale between ‘key worker’ and prime minister equivalent would be a huge change from the current situation where the average FTSE100 company CEO earns 250 times the income of their poorest-paid employee.
Truth 4: The welfare system is mean and cruel, but communities can be generous and kind
Despite financial assistance to businesses, the pandemic has forced many people to seek welfare support to cover food, housing and basic living costs. The Department for Work and Pensions (DWP) recorded 1.5 million additional claims for Universal Credit in March and April 2020.
Many were shocked to find that their basic entitlement would be less than £100 a week. In addition, the system as designed builds in substantial delays. There had already been a steady increase in reliance on food banks over the last decade. In 2018-19 the Trussell Trust reported that over £1.5 million emergency food supplies were provided by food banks in the UK.
Along with 750,000 other people, I signed up as an emergency volunteer at the start of the pandemic and have been helping the local food bank cope with a doubling of normal demand. Some of this is because of people isolating, but far from all of it. I live in an affluent part of England, with strong community support systems, so the picture will be more disturbing in less well-off places. The system for informing local people how to get help and for marshalling volunteer effort, using mobile phones and social media, was put in place in two days. Many areas have seen an outpouring of community activism and mutual aid, so much so that far-sighted local authorities are considering designing mutual aid into their normal response to need. Some councils, for example Wigan, Leeds and Shropshire, were already doing this for care and support services. A supply-driven and cost-constrained approach to supporting vulnerable people has neglected this fabulous resource. Universal Credit has taken close to a decade and is still not universal.
What a valuable lesson. The government has been tightening access to welfare, delaying and restricting funding, driving people unwillingly to seek charity, assembling all the complex array of disability, work, housing and childcare support into a single, meaner system with judgmental tests of entitlement – hence ‘universal’. Yet there is a huge resource of eager volunteers in local communities, generous with their time and non-judgmental about those they help. Isn’t the truth that a system that combined genuinely universal basic support with local, discretionary free help would be so much more humane and effective? There would, of course, need to be effective co-ordination. This could be facilitated by local authorities managing networks of support volunteers, with regular reports on activity to help inform national initiatives. This already works to ensure that government and voluntary food aid is effectively distributed.
In the next articles I will look at the tough truths about learning, about space and mobility, and finally about rights, responsibilities and leadership.
Andrew Webster is a Trustee of Centris and an advisor to health and care systems and businesses, having worked in the NHS, Local Government and Central Government for 35 years.
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