Unpredictable earnings or unpredictable livelihoods

Rayhaan Lorgat

Last month, the Resolution Foundation published a new report analysing the volatility of earnings using payslips of 250,000 employees based on new PAYE data from HMRC. It’s the first study in the UK to look at more “high frequency” data which means analysing pay on a monthly and weekly basis instead of annually.

I attended the launch event in early March and many of its key findings struck a chord with me based on the work we are doing at the IGP on livelihood security and Universal Basic Services (UBS). One key finding was that the prevalence of volatile earnings is higher amongst lowest-paid workers, those in temporary jobs or working multiple jobs, and young people. Through the work on the Citizen Prosperity Index, we have seen how people have stated that a secure income and good quality work is a key part of their livelihood security. However, this isn’t the only component and there is in fact several overlapping areas that people need such as financial, food and energy security, access to key services like transport, digital and childcare, secure and affordable housing, security about the future and freedom from financial stress.

While the Employment Rights Bill strengthens areas like extending statutory sick pay coverage, guaranteed hours and compensation for abrupt shift cancellations which are all welcomed amongst a raft of other changes and reforms, there is clearly more work to be done. Further policy options for the Government and employers are laid out in the report such as increasing the amount of statutory sick pay, providing flexible payment frequencies, but could UBS also play an important role here to help people experiencing volatile pay? With the certainty of essential services such as digital, transport, childcare, food, people would be able to smooth out their incomes and expenditures through a lower cost of living. This not only enables people to navigate the uncertainty tied with variable pay but helps ease the mental stress and pressures of worrying whether you can afford to put food on the table and make ends meet.

The panel also reaffirmed the point that alleviating such pressures would enable a more productive society and economy and is vital for the Government’s growth mission. This is due to the mental impact inhibiting people’s potential, life opportunities and ability to plan for the future for those experiencing volatile pay in a negative manner. I say ‘negative manner’ as not all volatile pay is deemed to be bad given that it’s also partly driven by pay rises and huge bonuses.

The Chancellor’s Spring Statement and welfare cuts may push more people towards deeper livelihood insecurity. The Government’s own impact assessment estimates that 250,000 more people including 50,000 children will fall into relative poverty by 2030 with 3.2 million families worse-off. Many have since stated that these figures could be higher. Irrespective of whether they will experience volatile pay, they and others will need to be supported with an adequate safety net to prevent the complete erosion of their livelihoods.

Rayhaan Lorgat is a Research and Policy Officer at the IGP. He works on the PROCOL UK team supporting the Institute Director on research and policy, the Institute's work on Universal Basic Services (UBS) and livelihood security and research network Rebuilding Macroeconomics.