Young and low-paid set to suffer the most financially from Covid-19
The outbreak of coronavirus and the measures imposed to contain it have put large parts of the economy into a state of deep freeze.
The incomes of many businesses and households have collapsed, suddenly and catastrophically.
The Institute for Fiscal Studies (IFS) says that it is the young and those on low incomes who stand to suffer most.
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From airlines to airports, pubs to restaurants, gyms to hotels, car assembly to retail, theatre to television production, activity in many sectors of the economy has ground to a halt.
The IFS analysis shows that:
Employees under the age of 25 are two and a half times more likely to work in a sector that has shutdown than other employees.
Low earners are seven times as likely as high earners to work in a sector that is shutdown.
Women are one third more likely to work in a sector that is shutdown than men.
The predicament of the young and those on low pay is only improved, the IFS argues, by the fact that the majority live either with parents or with others whose earnings have not been affected to the same extent.
Gender also determines how people have been impacted. Women work disproportionately in retail and hospitality, Covid-19 is likely to have a bigger effect on their income.
High earners, as the chart above shows, are not only more likely to have savings (and therefore in a better position to cope with a fall in earnings) they are also less likely to be affected by the shutdowns.
“For the longer term there must be serious worries about the effect of this crisis on the young especially and on inequality more generally,” says Xiaowei Xu, a Senior Research Economist at IFS, who carried out the analysis.
Theoretically, we are all in this together but the real lived experience of Covid-19 will be strikingly different from individual to individual.
The financial hardship the virus causes will not be evenly spread.
While sheltering with a parent may offer the young some protection, it inevitably damages feelings of independence and self-esteem.
The government is attempting to compensate both companies and workers for the loss of earnings they are experiencing as a result of what is, essentially, an act of God.
But despite the state aid on offer, companies will fail and people will lose their jobs in the months ahead.
Last week we learned that an unprecedented 950,000 people lodged new benefit claims for universal credit in the last two weeks of March.
The recession that is upon us will pass at some point and, when it does, a discussion will begin about how the many billions of pound as of state aid that’s on offer should be paid for.
The policy response will surely have to reflect the likelihood that it will be the living standards of those who are already among the most vulnerable that will take the greatest hit.
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