The Covid-19 crisis, as with so many economic crises, has affected those in more precarious livelihoods more than others.  In the U.K. alone there are over 5 million people registered as self-employed, which represents just over 15% of the workforce.

Previous research from the London School of Economics (LSE) explored how the self-employed have fared during the first six months of the pandemic.  The research revealed that the early months of the pandemic were defined by a significant fall in both hours of work and income for the self-employed, with this fall greater than for any kind of worker.

While this recovered somewhat over the summer months, both hours and earnings remain significantly below pre-pandemic levels.  Indeed, half of the self-employed people spoken to for the survey revealed that their earnings remained under £1,000 per month by August.  While this figure was marginally lower than in April, it was significantly higher than the 33% who reported likewise before the pandemic.

Enduring difficulties

A second paper from LSE returns to the topic to see if things improved as the pandemic wore on.  The data reveals that while incomes recovered somewhat during the summer months as lockdown measures were eased, there was renewed pain as the U.K. entered an autumn lockdown.

The data reveals that by January 2021, well over half of all self-employed workers were earning less than £1,000 every month.  This figure had risen from 31% at the start of 2020 (ie before the pandemic), and is even higher than the 46% who reported such income during August of last year.  Indeed, none of the income categories were showing higher numbers than they were in January 2020, suggesting hardship across the income spectrum.

Interestingly, however, while the previous research showed that this fall in income was hitting hard, with nearly half of respondents saying that they were struggling to make basic payments for things like housing, this had fallen in the latest data to just a third.  The authors believe this modest improvement is likely to be due to the changes made by the government in providing support for the self-employed.

Risking their health

Despite this, there is still evidently a lot of financial distress across the self-employed, which consequently results in a huge need to continue working come what may.  This may disincentivize self-employed workers from self-isolating if they have a positive Covid test.

The self-employed are still excluded from any statutory sick pay support, which is usually significantly more generous than the “test and trace support payment” available from local authorities.  That’s assuming that the self-employed can actually access this support, which data from the TUC suggests is unlikely with the help primarily given to those already on means-tested benefits, which generally excludes the self-employed.

The data suggests that of those who received a positive test for Covid, 25% revealed that they were not self-isolating, in large part due to the financial predicament they were in.  What’s more, the authors believe that the self-reported nature of their inquiry is likely to mean that such figures are under-reported.

Among those who did report that they self-isolated, 40% revealed that their income suffered as a result.  This underlines the financial hit the self-employed suffered from as a result of doing the right thing and the holes in government support that underpinned these actions.

“Our work here provides up-to-date descriptive evidence on how self-employment is faring in the crisis, showing in particular that while the current support is helping those who can get it, labor market incomes for self-employed workers at the start of 2021 looked much the same as they did in the first lockdown last spring,” the authors conclude.

A new deal

There have long been calls for the welfare system to modernize to better reflect the changing nature of the workplace, and shocks such as the pandemic often act as a reset point that allows such changes to emerge.  Society has form for using groundbreaking events to remodel itself, with the Depression and World War 2 prompting governments across the world to remodel the relationship between the state and citizens, with a greatly enhanced social safety net commonplace.

The pandemic has already seen many of the normal fiscal rules torn up, with governments across the world writing huge stimulus checks and paying the wages of workers whose livelihoods have been disrupted by the pandemic. While this largesse isn’t going to last indefinitely and governments are already beginning to show signs of tightening the purse strings, it is nonetheless likely that new social-welfare policies will emerge to help workers deal with the various disruptions facing them in the modern world.

There have been around 1,600 new social-protection programs launched around the world during the pandemic, with a clear shift in public attitude towards greater state support for those who have fallen on hard times. Indeed, there is growing support for policies such as a universal basic income across Europe, with around two-thirds of Europeans now backing such a policy.

This shift has been driven in part by the growing awareness many have of the working conditions of those people who are so important to the functioning of our society, even if they aren’t traditionally heralded as such. Food delivery drivers, supermarket workers, and care workers have seldom had a higher profile, while the difficulties experienced by working mothers who have often had to drop out of the workforce to care for children or elderly relatives have also received renewed exposure.

Welfare policies that were forged in an industrial age have increasingly been out of place in a modern world where a growing number of people have unconventional employment practices that so often fall outside of the full-time employment that welfare systems have been based upon. There is also precious little support afforded to people whose livelihoods have been disrupted to help them reskill and find new hope in fresh directions.

Large change often requires a “burning platform” to provide a sufficient jolt to shock us out of the status quo. The Covid-19 pandemic has certainly provided that, and so hopefully it will force governments to remodel the welfare system so that it’s fit for the 21st century.