Almost half of workers see their pay cut due to pandemic

Almost half of all workers in Scotland had their pay cut as coronavirus hit the country, a new report has found.

The IPPR Scotland think tank spoke about the impact of Covid-19 on people’s finances – but also warned the pandemic would still pose a “significant threat to lives and livelihoods across Scotland for some time to come”.

The new Weathering the Winter Storm report told how coronavirus had “exacerbated financial insecurity for families across Scotland”, adding many more people were now affected by this.

It called for urgent action from the Scottish and UK governments to tackle the problem, urging Westminster to make the temporary increase in benefits permanent and also consider how it can provide “additional support for families with children”.

The Scottish Government is being challenged to invest a further £40m to help low-income families with children this winter, with measures such as a new winter school clothing grant suggested.

The think tank also wants Holyrood ministers to work with lenders, energy providers, councils and housing associations to establish a Covid-19 arrears package – which could combine debt writes-offs and interest-free loans to help those who have built up arrears and debts in household bills during the pandemic.

The report found that just before the pandemic hit, one in ten were behind on bills, with this rising to one in four among the poorest households.

Prior to the pandemic, one in four people in Scotland could cope for just one month or less if they lost their main source of income.

“From this starting point, the Covid-19 crisis has exacerbated financial insecurity for families across Scotland and drawn many more people into a state of insecurity,” the report said.

By May, IPPR Scotland said one in five people were concerned about their ability to meet their financial commitments in the coming months.

Just under half of workers in Scotland reported experiencing a drop in pay at some point between April and June.

It said: “The Covid-19 crisis began as a public health emergency. As the crisis has unfolded, however, its economic impact and its effect on household finances have become clearer.

“Covid-19 is a disease that has claimed thousands of lives in Scotland but it will see many other victims from its economic effects. Already, we have seen an economic contraction like nothing seen before in this country and across the world.

“As we look ahead to the rest of this year and the prospect of unprecedented levels of unemployment, it is clear that this pandemic will continue to pose a significant threat to lives and livelihoods across Scotland for some time to come.”

A Scottish Government spokeswoman said: “We are aware of the financial impact the coronavirus crisis has had on many families, and are working hard to provide support for those who need it most over the winter.”

She said there had been an “unprecedented level of support during the pandemic”, adding: “We’ve created a £100m support package to help people looking for work or those at risk of redundancy.

“This includes a job guarantee for young people, a new national retraining scheme which will support up to 10,000 people over the remaining months of this financial year, and more funding for immediate assistance and advice if people are made redundant.

“To help parents access jobs and increase their earnings we are making over £7m available for our Parental Employability Support Fund in 2020-21, and have extended Fair Start Scotland for a further two years to March 2023.

“We have continually called on the UK Government to reverse welfare cuts which are hitting harder than ever, and to make fundamental alterations to Universal Credit, and urged them to maintain the recent £20 increase which is imperative if we are to stop more people being pushed into poverty.”