Covid-19: Improving Income Equality and Sustainability

The current health emergency is likely to have a disproportionately negative effect on the economic position of lower-paid people, young people, and women.

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Political and economic debates on the acceptability of different levels of income inequality have been ongoing for many years. Over the past decade in particular, a range of authors and bodies have suggested measures to reduce income inequality and improve income security in the light of various employment trends and strategic challenges. This work has received renewed focus due to Covid-19.

The Resolution Foundation has estimated that lower-paid people, young people, and women will disproportionately experience the negative economic effects of the pandemic. Other analysis has estimated that unemployment resulting from the pandemic and use of the Government’s furlough scheme are both set to be concentrated in some lower-paying sectors, such as hospitality and (non-food) retail. This could exacerbate existing inequalities.

In background to this, various measures indicate that incomes are more equal in the UK than in countries such as the United States but more unequal than in a majority of EU countries. Recent statistics indicate that income inequality in the UK increased slightly over the two years to the financial year ending 2019 but remains lower than the levels reached prior to the financial crisis.

The Government has introduced a range of measures since the budget because of Covid-19. Key measures include the introduction of a coronavirus job retention scheme; changes to the rules for statutory sick pay; and a self-employment income support scheme. A list of announcements made in response to the public health emergency is available on GOV.UK.

On 22 April 2020, over 100 opposition MPs and peers signed a letter calling for the Government to introduce a “recovery universal basic income” to limit economic and social damage arising from the Covid-19 pandemic. However, it has been reported that Chancellor Rishi Sunak is opposed to such a scheme.

On 6 May 2020, the House of Lords is due to debate a motion moved by the Archbishop of York that “the Virtual Proceedings do consider the case for increasing income equality and sustainability in the light of the recent health emergency”.

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