Financial Impact of COVID-19 on the Muslim Community

Download a PDF summary of this study or interact with the data for further findings.

This study has been conducted in response to the disproportionate impact the pandemic has had on minority communities in the UK. Many reports state that the pandemic could widen the income, savings and employment gap for minority groups across the country. However, the reports significantly lacked detail with regards to the Muslim community, and so, here we are. With over 3.3million Muslims living in the UK, we wanted to understand how the pandemic has financially affected our community.

Summary

1000 Muslims were surveyed between August 10th and August 24th

The split of people surveyed is as follows:

  • Gender: 52% Female to 48% Male
  • Age: 23% 16-21, 51% 22-27, 15% 28-39 and 11% 40 or above
  • Ethnicity: 78% Asian, 11% Black, 4% Arab, 3% White, 2% Mixed and 2% Other
  • Location: 59% London, 11% North West, 8% South East, 6% West Midlands, 5% Yorkshire & The Humber, 4% East Midlands, 2% East, 2% South West, 1% Wales, 1% Scotland, 1% North East.

Participants were asked 21 questions: 17 multiple choice and 4 long answer questions.

Key Findings:

  • 35% of working Muslims are employed in Key Worker roles
  • 15% of Muslims have lost their jobs as a result of the pandemic
  • 26% of Muslims have been placed on the furlough scheme
  • 27% of Muslim women have had to take additional caring responsibilities due to the pandemic that has impacted their ability to work
  • 57% of those who have lost their jobs have also had additional caring responsibilities impact their ability to work
  • 70% of Muslims have either had their household expenses increase or stay the same
  • 42% of Muslims have used their savings to cover expenses due to the pandemic
  • 28% of Muslims have had to borrow money either through family and friends or through formal means to cover their expenses
  • Muslims have been using payment holiday schemes at twice the rate of the nationwide average
  • Muslims are falling into poverty at a rate 10 times higher than the UK-wide estimation
  • 7% of Muslims feel they have become eligible to receive zakat due to the pandemic

Recommendations

  • Introduction of training and upskilling programmes for Muslims that are out of work
  • Personal finance education to Muslims in the UK especially to those that have applied for borrowing (personal loans, credit cards or overdrafts)
  • Identify and tackle the root causes of the disproportionate poverty rates amongst Muslims in the UK
  • A concerted effort to educate the UK Muslim community on what makes individuals zakat eligible in the UK

Limitations

With a sample size of 1000 participants, we have a substantial amount of data to draw from and make conclusions. However, this data does not claim to be an overall representation for the 3.3 million Muslims that live in the UK. This study is one representation of our population, of which there can be many, to provide insight into an area where there is incredibly limited data. Another limitation is the exclusively online collection of our responses due to the pandemics enforced restrictions. This has potentially limited our survey to those who can complete a survey online.

Furthermore, this report highlights that there was a struggle to attain responses from the White Muslim and Arab Muslim demographics. The current UK proportion of White Muslims stands at 7.8% and Arab Muslims at 6.6% whereas the responses we received stood at 3% and 4% respectively. This is something Muslim Census aims to address moving forward.

With all things considered, we hold firm the belief that this is still one of the most diverse and comprehensive sample-based studies that aim to unearth an understanding of the British Muslim community. As a Muslim-led study, we are confident that our findings are reflective of the UK Muslim community.

Background

Before going into detail on our findings, it is important to highlight the reasons why we at Muslim Census have conducted such a study. This past year has been defined by a global pandemic that has completely changed people’s lives across the world. Overnight, we have had our travel restricted, our attitudes to health and hygiene turned upside down and a life-altering impact has been made on our financial stability.

This report was initiated in response to the disproportionate impact this pandemic has had on minority groups. The government themselves conducted a review into why ethnic minority communities were falling victim to this virus at a higher rate than their white counterparts. The Telegraph also stated that the pandemic could widen the income, savings and employment gap for minority groups across the country. However, there was a limited understanding of the impact on British Muslims. With over 3.3 million Muslims living in the UK, we wanted to understand how the pandemic has financially affected our community.

We have split our report into the following four sections; employment, expenses, poverty and finally zakat. After an analysis of 1,000 responses, we are providing a comprehensive insight into these areas in which data for Muslims is extremely lacking. Following on from this, we hope our findings can raise awareness and drive further work into ensuring our community recovers and continues to strive for greatness in the wake of COVID-19.

Lastly, many of the findings we will be sharing may be tough to read, as it is our brothers and sisters in the UK struggling. However, as Muslims, we have faith that Allah is Ar-Razaq (the Provider) and it is He who cares for all of our needs in this world.

“And He will provide him from (sources) he never could imagine. And whosoever puts his trust in Allah, then He will suffice him. Verily, Allah will accomplish his purpose. Indeed Allah has set a measure for all things.”

Surah Talaq (65:3)

Employment

When evaluating the severity of the financial impact the pandemic is having on Muslims in the UK, it is essential to look at the employment sector. To understand the nuances of this, our survey looked to assess the data of issues such as the proportion of key workers, job loss and the furlough scheme.

To begin, we looked into the proportion of our sample that is key workers. The definition of a key worker is one who is a public or private sector employee who is considered to provide an essential service. Key workers include those working in health and social care, education and childcare, key public services, local and national government, food and other necessary goods, public safety and national security, transport, utilities, communication, and financial services.

The Muslim population in the UK is very diverse, but when you look closely, it has some very distinct features that set it apart from the general population. One of these said features is the proportion of Muslims who are key workers. Our data has shown that 35% of working Muslims are employed as key workers. This is 33% and 37% of the Male Muslim and Female Muslim population, respectively. This is substantially higher than the UK average of 22% key workers, where it stands at 18% for men and 26% for women. Our data also highlighted that the older-age demographic have a higher proportion of key workers with the 16-21 and 40+ age groups having a 23% and 40% key worker proportion respectively.

Muslims have a higher proportion of keyworkers compared to the national average

Whilst we must acknowledge these findings are from our sample of 1,000 participants, what we can be confident of is that the proportion of Muslims being key workers far outweighs the national average. This has resulted in large proportions of our community working on the front line during this global pandemic and is, therefore, a contributing factor as to why our community has been hit so hard with regards to the death toll.

When looking at job loss, our data showed that 15% of respondents had lost their jobs as a result of COVID-19. The Office for National Statistics (ONS) found that the number of employees in the UK on payroll was down approximately 695,000 in September 2020 compared with March 2020. This results in a decrease of 2.5% in the number of people in employment in the UK during the period of the global pandemic. Comparing this to our findings, it points to the worrying comparison that Muslims have lost their jobs at six times the rate of the national total. Unfortunately, we did not record which field each participant worked in but this is potentially one of the factors leading to this disparity being so large.

Job loss amongst Muslims is 6 times greater than the national rate

Of those who have lost their jobs, 25% have been able to find a replacement job with 44% of those people now in key worker positions. Across genders, women lost their jobs at a higher rate than men, 17% compared to 12%. Interestingly, a higher proportion of Black Muslims lost their jobs compared to other ethnicities. From our sample, just under 1 in 5 Black Muslims lost their job as a result of the pandemic. While across ages, both the 16-21 and 40+ age groups had the largest proportion of job losses at 19%. This data is corroborated by the ONS who explains, “The groups of people most affected [by the pandemic] are younger workers or older workers”.

Due to the effects of the furlough scheme on the employment market, analysts say the reduction in the number of hours worked per week is currently a more accurate reflection of the impact of the coronavirus crisis. 22% of people from our sample have had their hours reduced which is noticeably higher than the UK recorded rate of 16.7% in July 2020.

The furlough scheme was introduced and designed to help people who couldn’t work and prevent mass redundancies. Our data presented that 26% of the working population of our sample has been placed on furlough at some point during the pandemic. Similar to job loss, women have been put on furlough at a 5% higher rate than men. Overall, this largely falls in line with the UK wide data of approximately 1 in 4 workers being placed on the scheme.

Amongst the 16-21 year-olds that made our sample, there is a substantial increase in the proportion of those who have been furloughed. 36.6% of 16-21 year-olds have been furloughed since the lockdown was announced, which is 10% higher than the national average. This emphasises the reality that once the furlough scheme ends on the 31st of October 2020, our younger population will face a large number of job losses. In terms of people’s sentiments, 29% of Muslims fear future job loss. This is 9% higher than a recent study quoted in The Guardian that asked the same question to general members of the public. We cannot determine whether this is because Muslims are in more volatile sectors or the possibility that Muslims simply have a greater general concern.

A final note on employment, we asked our participants if they have had any additional caring responsibilities, as a result of the pandemic, that may have impacted their ability to work and financial stability. 21% said that they have had some kind of additional caring responsibility but there is a stark difference when comparing men and women. For men, 15% had additional caring responsibilities compared to 27% of Muslim women. The majority of these were detailed to be due to childcare or providing for their elderly family members. Moreover, out of the 136 respondents that claimed to have lost their job, 57% of these people stated additional caring responsibilities impacted their ability to work. With Muslim households generally larger than the average UK household size of just 2.4 people, there is a greater potential for caring responsibilities to significantly impact our communities. Majority of the causes for additional caring duties were due to caring for elderly family members or children due to school closures.

Quarter of Muslim women had increased caring responsibilities which impacted their ability to work

Some responses highlighting the key issues are as follows:

“I have found it very hard to work from home whilst also homeschooling my child.”

Response 846

“My autistic younger brother has been home due to his school closing with COVID. This means I am unable to pick up extra shifts to make up my lost work, as I have to look after him.”

Response 229

“Both parents were ill with COVID, mum was in the hospital for a couple of weeks. In total everyone was ill for at least a month. I wasn’t able to work or apply for jobs during this time.”

Response 529

Expenses

The lockdown caused a huge shift in the personal finances of individuals within our Muslim community. We used our findings to understand what steps were taken by people to adjust to this ‘new reality’.

35% of people claimed to have had their household expenses increase during the pandemic. A further 35% said that their expenses remained the same as before the virus and 17% were fortunate enough to have their expenses decrease. However, the removal of travel costs, working from home and the lack of social events all have led to almost 50% of our participants being able to save more than previously.

We asked several questions to understand how those that have struggled, have tried to react financially. After asking if people have saved, we also asked how many people have needed to use their existing savings to cover expenses. The results showed that overall, 42% of Muslims have had to use their savings to cover their expenses during the pandemic. Comparing this to a recent study by AJ Bell, an established investment platform, they recorded that 30% of people have had to use their savings. A substantial 12% difference that again reaffirms that the Muslim community in the UK, on average, have had to manage severely harsher conditions. Furthermore, within our findings, 50% of Black Muslims needed to use their savings during the pandemic which is larger than any other ethnicity. Further research would need to be carried to identify the reasons behind this worrying statistic.

Muslims resorted to their savings at a 12% higher rate to cover expenses
Muslims use of savings to cover expenses split by ethnicity

To gain a deeper insight into where Muslims were applying for financial assistance, we looked at the usage of borrowing in the form of overdrafts, credit cards, loans and family/friends support. We found that most respondents who used any financial support were more inclined towards borrowing money from family and friends or using an overdraft. 12% of participants borrowed from family or friends, 12% used an overdraft, 9% used a credit card, and 3% applied for a loan – all as a direct result of the pandemic.

Types of borrowing Muslims resorted to during COVID-19

Those who are on a low income, out of work, or cannot work, would have been eligible to apply for Universal Credit, which is a monthly payment to help with living costs. We asked our sample if they had applied for Universal Credit at any point during the pandemic and found that 10% of respondents had done so. Recent data published by the Department for Work and Pensions stated that a total of 4 million people made new Universal Credit Claims during the period from March 2020 (the beginning of the UK lockdown) to the end of July 2020. This is approximately 7% of the working UK population aged between 16 and 64. With 10% of our respondents having applied for Universal Credit, it points to Muslims applying for universal credit at again a noticeably higher rate than the national average. From our data 38% of Universal Credit applicants came from those that have lost their job, 22% came from those that were already unemployed, 15% came from those who have had their hours reduced at work, 13% came from those who have been furloughed and finally, 12% came from other cases.

What led Muslims to apply for Universal Credit?

Lastly, regarding expenses, we wanted to ascertain how many of our respondents used payment holidays. Payment holiday schemes were introduced in the UK by lenders as a response to people’s finances being hit by the coronavirus. This scheme allows individuals to delay their repayments, whether it is contributing to a mortgage, car insurance, or any other type of commercial financial borrowing, for up to three months. However, many banks have already declared restrictions in new lending opportunities for those that have used a payment holiday. 7% of participants stated that they have applied for a payment holiday from their lenders, of which half were full-time workers. Our survey did not ask for the type of payment holiday that people have taken advantage of, but this may be something we look into in the future.

Poverty

The severity of the impact this pandemic is having is varied across our sample. To understand in greater detail about those that have been the worse hit, our survey looked to gauge an insight into the rates at which people have fallen into poverty.

To do this, the definition of poverty in the UK must first be clarified. Unlike the poorest countries across the world, the definition of poverty is not as clear in the UK. What has been agreed amongst major poverty-tackling organisations, such as the Joseph Rowntree Foundation, is that to be classed as living in poverty, the household income would need to be 60% below the median income of the UK. According to the ONS, the median income in the UK is recorded at £29,600. Working out 60% below this figure falls just below £1,000 per month. Thus, it is important to clarify here that through expert consensus, we are concluding that if an individual’s household income falls below £1,000 a month, they are classed as living in poverty. Using this information, we asked our participants, “Has your household income fallen below £1,000 per month during COVID-19?” and examined further into the data collected.

16% of participants claim to have fallen into poverty as a result of the pandemic with a further 15% responding with not entirely sure. To give context to these numbers, the Institute for Public Policy Research (IPPR) calculated an estimate of 1.1million more people falling into poverty as a result of the pandemic. This number equates to 1.6% of the UK population. This points to the staggering comparison that as a result of COVID-19, Muslims in the UK are falling into poverty at a rate 10x higher than the UK average.

Muslims are falling into poverty at 10x the rate of UK estimates

This alarming finding is supported by a 2014 report by the Joseph Rowntree Foundation highlighting that 50% of Muslims are living in poverty in the UK, a proportion almost 5x higher than other religious groups. There is a clear disparity between Muslims and other groups and further work needs to be done to understand why that is, as well as to discover things that could mitigate these worrying trends.

It was also seen from our data that of the 16% who have fallen below £1,000 household income per month, 36% lost their jobs, 48% have had their expenses increase and 73% of these people have had to use their savings to cover their costs. Moreover, 43% of those people used their savings as well as one of the following; credit card, overdraft, loan or borrowing from a friend or family. These findings are an indicator in highlighting how severe the pandemic has been on these individuals and the members of their households.

Finally, across our demographics, women were more likely to fall into poverty compared to men, 18% compared to 15% respectively. Across ethnicities, the proportions for Bangladeshis, Pakistanis and Black Muslims were all at 16% while for Indians it was slightly lower at 12%. The starkest difference, however, was when we looked at the split across ages. Age-wise, 30% of the 40+ demographic have fallen into poverty whereas that number is 15% for those below the age of 40. It appears that the older respondents of our survey have fallen into poverty at double the rate of the younger sample.

Zakat

With the level of people now living below the poverty line, we wanted to ask the question of zakat eligibility and gain insight on perceptions of its distribution. We asked if respondents believed they became eligible for zakat at any point during the pandemic.

Of the 1000 responses, 7% of people deemed themselves to have been eligible to receive zakat during the period of COVID-19. A further 10% were unsure and finally, the vast majority of 83% stated that they had not become eligible to receive zakat. For those that have stated that they are living in poverty, interestingly only 15% said that they would be eligible to receive zakat. From the same group, 25% said they were not sure while the remaining 60% said no. However, for those that said they were not sure, 54% detailed a clear lack of understanding around thresholds and criteria that would make them eligible to receive zakat. The confusion around this was clear to see with responses such as:

“I actually don’t know the rulings other than what I’m told. There isn’t impartial information around.”

Response 65

“I thought I was eligible but since I was using the money I have borrowed I didn’t apply thinking maybe there are other people who would need the zakat more than I do, maybe they can’t find anyone to borrow from, but now I regret my decision for not applying.”

Response 223

“It never crossed my mind that someone like me (stable background) would be eligible to receive Zakat if it got to that point. Also not aware of the eligibility criteria.”

Response 236

Including questions about zakat eligibility in our survey has made it clear that there must be an increased effort in educating our community on what makes someone eligible to receive zakat in the UK. There are a small number of charities that cover this on their websites but this may not be in the best detail or wholly accessible. A more concerted effort to educate and clarify what deems people zakat eligible in the UK is crucial.

In terms of the wider context, through data that has been provided by National Zakat Foundation (NZF), just over 8,000 people have received zakat from the charity this year, which is a 50% increase compared to 2019. What is even more interesting is that this number is continuing to increase at a rapid rate. For August, NZF has distributed zakat to almost double the number of people compared to the average of the entire year of 2020. It shows that the effects of this pandemic are not letting up and we could continue to see this number grow after the end of the furlough scheme and if more education on zakat eligibility is provided.

The survey also asked two further zakat related questions. The first was to get an insight into our participants’ willingness to consider applying for zakat if they were suffering financial hardship.

A majority of 74% would be either ‘very unlikely’ or ‘unlikely’ to consider this whereas 11% of people fall into the ‘likely’ or ‘very likely’ category. It can be seen that there is an overall reluctance or lack of understanding around the possibility of receiving zakat. Further analysis shows that for those earning less than £1,000 per month, still, a significant minority of 15% of people would be likely or very likely to consider applying for zakat. This again emphasises a possible lack of understanding or overall stigma in applying for zakat. For individuals that deem themselves eligible for zakat, a higher figure of 34% of people would consider applying for zakat with still the majority of 51% selecting that they would not.

In terms of demographic, women are less likely to consider applying for zakat at 8% compared to 14% for men. Age-wise, the older you get, the more likely you would be to consider zakat with 8% for the 16-21 age group and 16% for 40 and above. The assumption is that younger Muslims are potentially more likely to have a support network around them from their parents, and thus see less reason to consider zakat.

The second question we asked to understand the perception of zakat in the UK amongst Muslims was how urgent people considered zakat distribution in the UK in comparison to zakat distribution abroad.

27% selected that zakat distribution in the UK was either not urgent or of less urgency compared to 41% selecting the urgent or of utmost urgency option. The remaining 32% deemed that both abroad and UK zakat distribution held equal importance and urgency. Amongst the older demographic, there is a higher priority given to distributing zakat within the UK with 46% of the 40+ demographic picking either urgent or of utmost urgency compared to 33% for the 16-21 age group.

There does not seem to be any public data to highlight where Muslims in the UK are giving their zakat, however traditionally there has been an overwhelming preference to donate abroad. The global pandemic may have caused a shift in this mentality amongst the UK Muslim community. The evidence towards this shift is that NZF has raised and distributed a massively increased 121% more in funds in 2020 compared to that of 2019. Further analysis will need to be conducted across other Muslim charities in the UK, but our data suggests that there has been a potential behaviour change that could lead to an increase in domestic donations in the future.

Biggest Financial Concerns

For our last question, we asked our participants to highlight what their biggest financial concern is going into the final quarter of the year and beyond. The largest concern was regarding the current job market with 54% of participants voicing their concerns over job security and opportunity in the next year. Unsurprisingly, the majority of these concerns came from the younger participants of our sample. Another 40% of participants pointed to the potential rise in living costs and financial stability being their biggest concerns. A portion of those detailed that they are struggling with worrying levels of debt as a result of the lockdown. The remaining responses explained a concern in the health of the Muslim community, with comments focused on the mental well-being of themselves and others after the effects of COVID-19. Some of the responses that emphasised concerns were:

“With all the job cuts, there’s been less positions available and I’m unsure about the possibilities of finding another part time job. Also, if I don’t find another job, I don’t know how long my brother’s earnings/furlough, my parent’s benefits and student finance payments are going to ‘last/suffice’.”

Response 6

“losing our home if financial circumstances get worse”

Response 113

“Managing to get through 2020, paying up my debts, not breaking down mentally as this won’t help my financial situation”

Response 76

Many of the responses we received were extremely tough to read and analyse. Thus, we urge the people that are in a dire financial situation or know of those who are, to please visit National Zakat Foundation’s Hardship Relief Fund and apply if they deem themselves eligible.

Conclusion

Through what we have presented in this study, it is clear to see that the Muslim community in the UK have been disproportionately affected when compared to UK averages. With this information around the impact on employment, expenses, poverty and zakat, we urge further discussion and studies from within the Muslim community, as well as outside of it. We also ask that those who are reading to subscribe to our distribution list and support our work so that further studies like this can be carried out.

Note: We want to give a huge thank you to National Zakat Foundation who have supported this study and to all those that took part in our survey and shared. Above that, a special thank you and recognition to our team that has worked tirelessly to produce this large scale report. Thank you to Abdul-Azeez Ganiyu and Neena Jamal.

May Allah put barakah in this project and allow our work to continuously benefit and unite the Ummah. Ameen.