> Why is it some shock-horror thing that people worked less?

Working less is not so bad, but their income (before transfers) also went down. That means they did not replace poorly paying jobs with better paying ones (or they did with net decrease), nor started a business.

The issue is that social safety net is meant for people who's income is seemingly too low. If the net effect is to decrease that even lower, then yes its a concern.

(for clarity, I read the link not the paper)