Downturn in workers' mental and financial wellbeing during Covid-19

Posted on by Rebecca Florisson

lady walking with head in hands

The COVID-19 crisis has impacted almost all aspects of our lives to an unprecedented extent. With large numbers of workers furloughed, on reduced hours, or having lost their jobs, many experienced a fall in income in spring and summer 2020. This briefing analyses biennial Understanding Society survey data alongside monthly waves conducted over spring and summer 2020, to explore the extent to which such falls in income are impacting mental wellbeing.

Key findings include:

  • The COVID-19 crisis is having a differential financial impact on workers on low incomes, with those who were just getting by prior to the crisis 7 times more likely to struggle financially now, compared with people who were better off.
  • Workers who were ‘finding it very difficult to get by’ before the crisis have experienced a greater negative impact on their mental wellbeing.
  • A drop in financial wellbeing was more likely for workers in some low-paid sectors that were impacted by lockdown and restrictions, such as hospitality, and ‘other services’, which includes in-person services such as hairdressing.
  • Workers who were permanently laid off experienced substantively increased levels of mental distress.

Those who are finding it difficult to get by now, may be at particular risk if there are further pressures on household income over the months ahead. Although the Coronavirus Job Retention Scheme is helping to prevent job losses through subsidised wages, furloughed workers are losing one fifth of the usual income, which could soon become hard to bear for workers on low pay.

Going forward: Developing policies that support financial and mental wellbeing

Considering some form of restrictions are expected to be in place at least until summer 2021, and the impact that this will have on economic activity and workers’ livelihoods, it is essential we rethink the role of the welfare system in providing financial support to those who need it.

As a starting point, the £20 per week uplift to Universal Credit (UC)should be maintained beyond its current end date of April 2021. Not only would this provide additional financial certainty for those currently receiving UC, it may well help mitigate further falls in mental wellbeing for those most affected by the crisis in the months to come.

Download the full briefing here

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