How Covid-19 Is Increasing Inequality

Inequality was steep in Britain before the pandemic, but those who entered this crisis with insecure work, low pay and high rents will leave it even worse off – if we want a better future, it's time to organise.

Pandemics increase inequality. Historical evidence, and more recent economic research, suggests that the gap between rich and poor has widened during and after many recent pandemics – from SARS, to Swine flu and Ebola.

Today, it is becoming increasingly obvious that Covid-19 is a pandemic that is being lived in two halves. Those who have managed to keep well-paid, secure jobs, which allow them to work from home are beginning to see the light at the end of the tunnel. They are slowly re-emerging from their homes to see their friends, go shopping and eat at restaurants, often with a large discount provided by our Conservative Chancellor. 

This is not to say that those who have managed to keep their jobs have not struggled over the last few months. There has been a huge amount of uncertainty, emotions have been fraught, and there have, of course, been far too many deaths. But for some in the UK, it is beginning to feel as though things are slowly returning to normal. 

For nurses, carers, travel, retail and hospitality workers it’s a very different story – one much more closely aligned with the economic statistics and forecasts.

Frontline health and care workers have seen an inhuman amount of pain over recent months – and not merely among those they have been treating. They and their colleagues have been sent onto the frontline of this crisis with inadequate safety equipment, after having spent the last ten years seeing their budgets cut and their salaries frozen.

Those who work in travel, retail, hospitality and other consumer-facing services jobs are on the sharp end of an unemployment crisis. Many have already lost their jobs as businesses have cut staff, or simply folded under the pressure of lockdown, and many more have seen their hours cut or pay reduced. Others, like the British Airways workers, find themselves subject to ‘fire and rehire’ schemes designed to drive down terms and conditions.

Such workers are generally living in the private rented sector and – unlike their landlords – have not been given a break on their rental payments. Many were already struggling under the burden of significant unsecured debts – whether expensive overdrafts, credit card debts or payday loans: low interest rates will do a lot to help those with mortgages, but often aren’t passed on to these borrowers. 

Then there are the young people. Those in education have seen their learning profoundly disrupted. The A-Level fiasco was a symptom of a much more significant problem: the pandemic will dramatically increase inequality in access to quality education. 

For those young people going into the workplace, things do not look much better. Those who enter the workforce during recessions experience a ‘scarring’ effect on their incomes, which reduces their lifetime earnings. Those who end up suffering from long-term unemployment may struggle to find a regular job for years to come.

In fact, there has been a great deal of research to suggest that, while the elderly, men and those in the capital have often been those hit hardest by the disease itself, the economic impact of the pandemic will be felt most acutely by young people, women and those living in the regions. People of colour are facing a double whammy – they are both disproportionately likely to die from the virus, and will suffer disproportionately from the economic fallout. 

Inequality was already far too high before the pandemic began. While right-wingers have spent the last decade telling us that inequality hasn’t risen since the 1990s, new evidence suggests that this simply isn’t true. Inequality has risen substantially in recent years, but it wasn’t showing up in the data because the rich were finding ever more clever ways to disguise their income in order to avoid tax. 

What’s more, we were already facing a number of other pressing challenges that required immediate, coordinated action to solve before the pandemic hit. Employers were harnessing technological change to disempower their workers and increase monopoly power. 

Research from McKinsey suggests that many of the jobs most at risk of automation are also those most at risk from the economic impact of the pandemic. Meanwhile, the growth of the digital economy seen during the pandemic will only bolster ‘gig’ employers and consolidate the power of the big tech monopolies. 

Given that most members of the government, their colleagues and their social circles have experienced the easy end of the pandemic, how are they supposed to respond to the concerns of those suffering from the fallout? In a few months, we will see government ministers trotting out the familiar line that ‘we need to make some tough choices.’ Just as was the case last time, these choices will inevitably deepen inequality rather than tackle it.

We cannot allow this to happen. As I have argued before in Tribune, the only way to respond to this crisis is with a Green New Deal that creates jobs, reduces inequality and decarbonises the economy. We cannot rely on those who have been largely insulated from the current economic crisis to provide a just recovery.

It is those who have been hardest hit by the pandemic – the majority in this country that was also hit hardest by the financial crisis and austerity – who must mobilise to demand a better world. If we fail in that task, the coming decade will be far worse even than the last.