The UK's inequality gap is widening. With COVID-19 bringing upon us one of the worst financial crises in centuries, a country which already had a problematic inequality gap was only able to get worse.
It is just normal that, in these circumstances, trust in the governments is at a minimum low. This is the time for brands and businesses to react.
A few weeks ago we have interviewed MediaCom London strategist Helen Brain to know more about her career and dreams for the industry. Since we loved that chat so much, we decided to reach out again to ask her about the UK's inequality gap... And how brands can address it effectively.
Brands take note: the UK’s inequality gap is widening
The UK is one of the world’s most developed nations. It leads in industries such as finance and technology, and harbours some of the world’s most creative minds.
It also has some of the highest levels of inequality.
To be exact, the UK ranks as the 5th most unequal developed country in the world, with the top 20% of the population holding nearly half (47%) of the nation’s wealth. In comparison, the bottom 20% holds just 8%.
The COVID-19 pandemic has sparked change for governments and businesses alike, be it through the importance of public health or a drastic and swift shift towards agile working. It has also exposed many inequalities within society.
While the long-term economic damage of the pandemic is still unclear, the financial health of many within society will likely remain affected for a long time. And brands can, and should, use this moment to position themselves as allies to the wider public to build trust, inform audiences and create lasting positive connections.
Many can no longer spend within their means
The employment market has been badly hit by the pandemic; with non-essential work put on hold, many businesses are struggling.
As a result, the number of workers on payrolls between March and May, the peak of the UK’s COVID-19 epidemic, went down by more than 600,000. Meanwhile, the number of people claiming work-related benefits rose by 126% to 2.8 million. The longer that COVID-19 is present, the larger this number may become.
This is concerning from a UK perspective; as a country, we save less than any of the 27 member states of the EU. 15% of Britons have no savings at all – a figure that rises sharply amongst 22-29 year olds (53%). Moreover, there are 13 million people who do not have enough savings to support them for one month if they experienced a 25% cut in income.
And it is those in lower-income households, who are more likely to work in jobs where working from home is not an option, that are more likely to increase their debts.
Financial pressure is added with some renters fearing they will be left with huge debts after they lose their jobs, and as a result forced out of their homes with eviction notices. Those people are also feeling the heat from lockdown.
Marginalised groups have been particularly impacted
Groups of marginalised people, such as the elderly and disabled, are likely to be hit even harder by COVID-19. Scope, a national charity that supports disabled people, reported early in the UK’s lockdown that around a quarter of their calls were due to issues being caused by the Coronavirus.
For example, panic buying made it harder for disabled people to buy essential items, with the more expensive option becoming the only alternative. One woman with muscular dystrophy – a genetic condition that gradually causes the muscles to weaken – could no longer source the specific latex gloves she needed to suction her airway and ended up having to purchase some from Amazon for £70. That’s £70 just to purchase one essential item.
People on the cusp of retiring will also be hit. About 700,000 people will reach retirement age this year, and only 230,000 of them have a private pension. But the value of those pensions could decrease dramatically in the short-term at the very least because of the financial impact of COVID-19.
The government is trying to help through various stimulus packages targeted at mitigating the virus’ economic impact. The furlough scheme, access to universal credit for the unemployed and statutory sick pay are just some examples of the attempts made to soften COVID-19’s blow.
However, there are concerns that some issues still need to be addressed. For example, statutory sick pay works out about £18 a day – nowhere near the sort of income that anyone would find liveable.
Therefore, those who hold a lower share of wealth in society are also those who are going to be more impacted by COVID-19, widening the inequality gap.
An indirect impact of this is that trust in different figures will change. The more unbalanced a society is, the less trust there is in government and the more there is in business. This is where brands can step in.
How brands can use their position of trust
As brands look to grow in a COVID-19-impacted world, they need to revisit how they target audiences. With the long-term financial health of many significantly affected, previous audience understanding and behaviours will significantly change.
Lockdowns are beginning to ease across Europe, and as we move towards a ‘new normal’, brands will be aware that their customers have been struggling more than ever before. Businesses must consider how they can be helpful to their customers in terms of managing their finances and budget.
Trust will be a big factor as consumers begin to regain confidence moving forward. Recent IAB data found that over half (53%) of the advertisers that have developed new assets during the pandemic that had a greater sense on the mission of the company. Brands are realising they need to prove they are allies to UK society.
This cannot be limited to what they sell. It also needs to encapsulate how they sell it, and how they treat their employees, the vulnerable and key workers as we take our first steps back out of lockdown.
Businesses were quick to support the marginalised groups in society during the peak of the UK’s epidemic. This support must continue in the long-term.