A survey shows the impact of lack of notice and shift cancellations on low earners, while a report for the Institute for Fiscal Studies finds that the self employed have been hard hit by stagnating wages and that this could affect social mobility and intergenerational inequality.
Over half of shift workers get less than a week’s notice of their work schedule, with 14% of this group – 8% of all working adults – being given less than 24 hours’ notice, according to a new survey.
Using data taken from a sample of over 2,000 UK adults interviewed by Survation, the study by the Living Wage Foundation found that 57% of UK workers work variable hours or shifts and that the lowest paid workers, including cleaners, couriers and some NHS staff, are more likely to be affected. by short notice of shift hours.
Among workers earning below the real Living Wage half received less than a week’s notice when being called into work, compared to 28% paid at or above the Living Wage. Moreover, a third have had shifts cancelled unexpectedly over the past 12 months, compared to 18% of workers paid at or above the Living Wage.
Over a quarter (27%) of workers who have experienced short shift notice periods or shift cancellations incurred higher travel costs as a result and 17% have had to pay higher childcare costs.
Nearly half (47%) said they lose out on £30 or more per month due to this insecurity. Almost one in three (29%) low paid shift workers were forced to increase their reliance on credit/debt to make ends meet compared to 17% of those at or above the real Living Wage.
The polling found that over a fifth (21%) of shift workers have had their shifts cancelled unexpectedly. The vast majority of such shift cancellations are not compensated properly, with 88% receiving less than their full payment and nearly a quarter (23%) receiving no payment at all. This means when shifts are cancelled, workers are almost twice as likely to receive no payment as they are to receive their regular pay, says the Living Wage Foundation.
Certain workers are more likely to receive lower levels of pay when shifts are cancelled, with 69% of ethnic minority workers and 68% of female workers getting less than half of their regular wage when their shifts are cancelled.
Katherine Chapman, Director of the Living Wage Foundation, said: “We’ve long known that it costs to be poor, but this research shows it’s even more costly to be both poor and in insecure work. It’s shocking that half of workers earning below the real Living Wage are given less than a week’s notice of shifts, making it impossible to plan a life and resulting in extra costs such as last minute childcare.
“In an unfolding costs of living crisis with energy bills set to rise even further, low-income households are facing ‘heat or eat’ decisions. That is why we’re calling on employers to join those who have already stepped up during this crisis and commit to provide workers with Living Hours – secure, guaranteed hours and notice of shift patterns – alongside a real Living Wage.”
The study comes as another report highlights the problems faced by self employed workers whose incomes have stagnated and who have also been hit by cuts in tax credits in recent years.
The report for the IFS Deaton Review of Inequalities, funded by the Nuffield Foundation, looks at chronic lack of real wage growth in the UK since the financial crisis of the late 2000s. It says that lowest earners have bucked the trend due to rises in the minimum wage. For instance, between 2011 and 2019, the earnings of low-earning employees grew twice as fast as median earnings.
However, the report says those who are self-employed are missing out as they are not covered by the minimum wage. About one in four of the lowest-earning fifth of workers are now self-employed – a fraction that has increased by 50% in 20 years.
The report adds that cuts to tax credits have also hit the lowest earners, with the self employed facing a double hit.
It highlights two growing problems – the lack of tools to boost earnings for anyone other than the lowest paid. The report says that compared at the same age, median earnings for those born in the 1980s are no higher than they were for those born in the 1960s.
The report points to the expansion of the minimum wage, which now affects double the proportion of employees covered than when it was introduced in 1999, as having a positive impact on earnings. It adds that hundreds of thousands more have had their wages boosted indirectly as firms maintain pay differentials and apply adult rates to younger workers and calculates that its real value for those aged 25+ has increased by 60% since 1999 and 20% since 2015.
It estimates that real weekly earnings for employees at the bottom of the distribution grew by more than 20% at the 10th percentile – but by less than 10% at the median between 2011–12 and 2019–20. Tax credits also helped to boost lower paid workers’ incomes, meaning their total incomes kept pace with those of middle earners, even though their earnings grew only half as fast. Benefits cut under the austerity regime have slowed this income growth, however.
Stephen Machin, Professor of Economics and Director of the Centre for Economic Performance at LSE, said: “Higher earnings inequality, with low real earnings growth and a very different labour market from 40 years ago have placed the world of work in a much more unequal place. To halt or reverse this trend requires that significant attention be devoted to ways to restore and reinvigorate real earnings growth and to generate decent jobs with good career opportunities in an inclusive way.”