Coronavirus: key workers’ pay and working conditions

Published 21/05/2020   |   Last Updated 27/05/2021   |   Reading Time minutes

Across the UK, the Institute for Fiscal Studies (IFS) has found that on average key workers are paid less per hour than the rest of the workforce and that this pay gap has been growing over time. This is despite key workers having similar demographic and educational characteristics to the rest of the workforce. Consequently, this topic has received considerable media and political attention over recent weeks.

This article looks at the data on key worker pay for Wales, as well as what action the Welsh Government has taken on pay and working conditions. There have been a number of arguments made about what should happen to key worker pay and working conditions in the post-pandemic economy, so we’ve also summarised these.

Alongside this, we’ve published an article today on the characteristics of Welsh key workers, setting out which sectors they work in, how they compare to the general population, and how they have been affected by coronavirus.

Our previously published articles on personal protective equipment (PPE) and testing cover these topics in respect of key workers.

There are differences in pay across key worker occupations

There are considerable pay differences across key worker occupations. The IFS states that:

Some sectors, such as professional services, are much better-educated and better-paid than the rest of the UK workforce. Others, such as the health and education sectors which employ the majority of key workers, look more similar to the rest of the economy.

But some sectors – most notably the social care and food sectors – stand out in the other direction. Workers in these sectors are paid much less than other key worker sectors.

From analysing data from the Office for National Statistics, we can see that this is also the case in Wales. All sectors have roles with median pay above £20 per hour, but almost all sectors also have roles with median pay below £10 per hour with some roles paying below the voluntary Living Wage of £9.30 per hour. Median pay is the level of pay at which half of all workers are paid less than this value, and the other half are paid more.

Gross median hourly earnings of the highest and lowest earning occupations in each key worker sector in 2019

Graph showing hourly pay in key worker sectors in Wales.Source: Research Service analysis from Office for National Statistics, Employee Earnings in the UK 2019 using key worker definitions from Office for National Statistics, Coronavirus and key workers in the UK

Some key worker occupations in the health, social care, food and education sectors are particularly low-paid

There are a number of key worker occupations that have relatively low rates of pay. The Trades Union Congress (TUC) has estimated that 38% of key workers in Wales are paid less than £10 per hour.

Data from the ONS shows that key worker sectors with the lowest paying roles in Wales are food and necessary goods; childcare and education; and health and social care.

Gross median hourly earnings for employees in Wales for 10 relatively low-paying key worker roles in 2019

Graph showing selected key worker roles with relatively low hourly pay.Source: Research Service analysis from Office for National Statistics, Employee Earnings in the UK 2019 using key worker definitions from Office for National Statistics, Coronavirus and key workers in the UK

The press, think tanks and other organisations have paid particular attention to the relatively low earnings of many social care workers, given their role in caring for some of the people most vulnerable to coronavirus.

The Resolution Foundation highlights that 56% of frontline care workers in Wales earn below the voluntary Living Wage (which is higher than the statutory National Living Wage and National Minimum Wage set by the UK Government). It states that across the UK care workers in the private sector are paid less than those employed by local authorities.

Percentage of frontline care workers paid less than the voluntary Living Wage in each UK nation, 2017-19

Graph showing percentage of frontline care workers earning below the voluntary Living Wage in each UK nation.Source: Resolution Foundation, What happens after the clapping finishes? The pay, terms and conditions we choose for our care workers

Some low-paid key worker occupations have felt the largest impact of coronavirus

The ONS has highlighted that across the UK, 6 of the 16 occupations with greatest potential exposure to coronavirus have lower median hourly pay than the UK average.

In Wales, data is available for 11 of these occupations and shows that four of these occupations earned below median hourly earnings in 2019. Across the UK, all four of these occupations also had pay below the UK median.

Gross hourly median pay in Wales for occupations with highest exposure to coronavirus, 2019

Graph showing median hourly pay for key worker occupations with the highest exposure to coronavirus.Source: Research Service analysis from Office for National Statistics, Employee Earnings in the UK 2019, using occupations most exposed to coronavirus from Office for National Statistics, Which occupations have the highest potential exposure to the coronavirus (COVID-19)?

Additionally, three of the five occupations with the highest rates of coronavirus-related deaths in England and Wales are classed as key workers. All three of these occupations - security guards and related occupations; care workers and home carers; and bus and coach drivers – earned below the median hourly wage in Wales in 2019.

Over recent years the Welsh Government has worked towards Wales becoming a Fair Work Nation

Employment and industrial relations are not devolved to the Senedd (with the exception of setting agricultural wages), and the National Minimum Wage and National Living Wage are set each year by the UK Government. As of April 2020, the National Living Wage is £8.72 per hour, with the UK Government proposing that this will rise to £10.50 per hour by 2024.

The Welsh Government has stated its ambition for Wales to be a Fair Work Nation. In March 2019, the Fair Work Commission’s report made recommendations on how this could be achieved, including through legislation, influencing the UK Government, enforcement of current legal rights, promoting fair work through economic incentives, working with trade unions, and building capacity within Wales to deliver fair work.

In November 2019, the First Minister wrote to all public bodies in Wales asking them to achieve Living Wage accreditation, acknowledging that this may take time for some organisations. Many organisations in the devolved public sector already pay all directly employed staff the voluntary Living Wage of £9.30 per hour. These include NHS Wales, many local authorities, the Senedd, the Welsh Government and some of its sponsored bodies.

Devolved public sector bodies have also been expected to sign up to the Welsh Government’s Code of Practice for Ethical Employment in Supply Chains. Its signatories have made a number of fair work commitments, including considering paying the voluntary Living Wage and encouraging suppliers to do so, not using “unfair” zero hours contracts, and ensuring that workers are allowed to join a trade union or collective agreement.

The Welsh Government has also published a White Paper on a proposed Social Partnership Bill, which would place a duty on public bodies to work to promote fair work goals.

In relation to the private sector, the Welsh Government’s Economic Contract requires firms applying for Welsh Government financial support to meet four pre-qualification criteria, including fair work. The definition of fair work used is the one developed by the Fair Work Commission, which is “where workers are fairly rewarded, heard and represented, secure and able to progress in a healthy, inclusive environment where rights are respected”. Many private sector employers in Wales pay the voluntary Living Wage, and some employing key workers have paid them bonuses during the coronavirus pandemic.

Regulations have been in force since April 2018 so that domiciliary care (home care) workers who have been employed on a non-guaranteed hours contract, and have worked regular hours for at least three months, have the right to choose to be employed under alternative arrangements with guaranteed hours. The regulations also require providers to distinguish between travel time and care time when arranging services, so that in most cases care visits must be for at least 30 minutes.

The Welsh Government has funded a number of pilot projects relating to fairer employment in the social care sector through the Foundational Economy Challenge Fund. It has also committed to developing a Social Care Fair Work Forum to assess what further steps should be taken to deliver fair work in the sector over the medium and longer term.

The Welsh Government has made changes to benefit some key workers since the start of the coronavirus pandemic

On 27 April the Welsh Government stated that it would introduce a scheme to provide financial support of £60,000 to the beneficiaries of NHS and Social Care frontline workers, for coronavirus-related deaths. Workers and employers are not required to make contributions towards this scheme, which aims to provide a safety net for staff who are either not eligible to join pension schemes or choose not to for affordability reasons.

The Welsh Government announced on 1 May that it would fund an additional payment of £500 to care home workers and domiciliary care workers across Wales to recognise an often “overlooked and undervalued workforce.” It has called on the UK Government not to tax this extra payment, and is working to ensure that it does not affect any welfare benefits that workers may be entitled to.

A number of organisations have made recent suggestions for future changes to key workers’ pay and working conditions

Over recent weeks there have been a number of calls for changes to key workers’ pay and working conditions, particularly in relation to the social care sector.

The IFS has suggested that understanding differences in the pay and working conditions between groups of key workers will be important in making any changes, stating that:

For policymakers who wish to change the working conditions of key workers, a first step will be to acknowledge the differences between them. While appreciation and gratitude should certainly extend to all the people in these critical roles, post-pandemic policy must not be based on overly broad categorisations that hide the differences within.

The TUC has called for a £10 minimum wage across the UK, fair pay rises for key workers, and for increased Statutory Sick Pay. Unison Wales Cymru has also stated that all care workers in Wales should be paid at least £10 per hour, to address in-work poverty and to recognise the contribution they make.

Specifically in relation to social care, the Resolution Foundation states that all care workers across the UK should be paid at least the voluntary Living Wage. The Institute for Public Policy and Research has called for a pay guarantee for health and care workers across the UK, covering sick pay, bonus payments, and payment of the voluntary Living Wage. The Bevan Foundation has argued that improving reward and protections in the sector must be prioritised.

The First Minister has said that the Welsh Government will be working with employers and trade unions to see if all care workers in Wales can be paid at least the voluntary Living Wage on the other side of the coronavirus pandemic. He also stated that additional funding from the UK Government would be required to do this.

Article by Gareth Thomas, Senedd Research, Welsh Parliament

We’ve published a range of material on the coronavirus pandemic, including a post setting out the help and guidance available for people in Wales and a timeline of Welsh and UK governments’ response.

You can see all our coronavirus-related publications by clicking here. All are updated regularly.