How can you budget when you don’t even know if you’ll be working?
We often assume that a job will provide us with financial stability. Work is supposed to give us a stable income, a dependable budget, and the relief of not having to stress about the next month’s rent. However, for those in insecure work, jobs don’t necessarily guarantee this peace of mind.
In a recent survey, hundreds of people told the TUC about their experience of insecure work.
We previously looked at what they told us about how insecure work leads to unpredictable hours and the impact this has on social plans and childcare arrangements. But not knowing when you’ll be working, or how long for, also has a financial impact.
Making ends meets
Irregular hours and the resulting fluctuations in pay left some respondents unable to pay bills or struggling to get by for the month.
The phrase “making ends meet” cropped up a few times.
Many respondents told us about how difficult it is to budget without knowing how much you’ll be earning from one week to the next.
The number of hours we are given every week changes, which sometimes makes it difficult to make ends meet.
Concerns about bills and budgets causes sleepless nights. These concerns also force those in insecure work to take any shift they’re offered, regardless of the personal impact.
It isn’t steady and I hardly get work but always have to be available to work just in case they phone. When they do phone I have to drop everything and say yes otherwise I can’t pay bills.
The precarious financial situation created by insecure work puts all of the power in the employers’ hands. It provides employers with the freedom and financial benefits of a flexible workforce, while burdening workers with financial risks and worries.
Struggling with rent
It’s not just bills. Being paid erratically makes it hard to find landlords willing to rent to you.
For those who do manage to find a place, fluctuating pay makes it difficult to keep up with rent payments. A sudden cut in hours, or a couple of weeks with no work, can quickly force those in insecure work to struggle to get the money together.
A waiter working on a contract that only guarantees 5 hours of work told us how his work week can fluctuate anywhere between 15 and 45 hours. This left him with no idea whether he’d be able to make rent. Another respondent told us:
My hours are often changed at very short notice which means my earnings for the week can suddenly be cut in half. This made it practically impossible to find a landlord willing to rent to me … I’m constantly having to ask my parents to help me with bills and rent. I feel terrible about taking money from them but there’s literally no other way for me to keep my flat.
Some have never had the chance to move out from the family home, and didn’t see the opportunity arising anytime soon.
A duty manager in a pub, working on a zero hours contract, told us how he had to keep living at home as his fluctuating hours mean that he could never guarantee that he’d be able to pay rent.
Moving out doesn’t mean you won’t return. We heard from some who flew the nest, only to have to move back in when they couldn’t make rent.
Insecure work pays less
The experience of those in insecure work fits in with what other research tells us – insecure work pays less than more secure work.
Even when you control for a wide range of factors, those on zero hours contracts are still paid less than those doing a similar job on more secure contracts. On average, insecure works pays almost 7 per cent less. For a typical worker, this works out at about £1,000 a year.
The discrepancy is greater still for workers in lower-paying roles. The lowest 20 per cent of earners are paid at least 9.5 per cent less than those in similar roles who are not employed on a zero hours contract.
Pay isn’t great for the self employed either. In 2016, the Social Market Foundation found that around half of self-employed workers are in low pay. In comparison, just over a fifth of employees are low-paid.
It also costs the country
It’s not just the worker that loses out from insecure working.
The rise of low-paid self-employment and zero hours contracts is costing the economy billions every year in lost tax revenues.
That means we all lose out as a result of employers using zero hours contracts and shady “self-employment”.
In our next post on people’s experiences of insecure work, published tomorrow, we’ll look in more detail at how finances (and other factors) create a fear of turning down shifts.