I'm with you on asking why that data was even on a removable drive. What possible use case is there for that? And if there is one, like transferring between airgapped networks, it seems you'd encrypt it at least.
The USB key was used to transfer the data from a government office to a service firm reviewing Covid19 related benefit claims and fund distribution. The employee mistake was to not delete data from USB key after transferring to the firm's system.