Insecurity: the missing piece of the labour market puzzle

Yesterday’s report by Citizens’ Advice highlighted the problem of income insecurity. It found, perhaps unsurprisingly, that security of income is as important to people as the amount of money they earn.

Screen Shot 2016-06-13 at 14.49.03

Despite all the fashionable motivational stuff about being passionate about work, security might be the key to employee engagement after all.

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Citizens’ Advice estimates that there are around 4.5 million workers in insecure work, which it defines as zero hours and variable contracts and temporary/agency work. This figure doesn’t include the self-employed. Although it is difficult to measure the precariousness of self-employment, all the available data suggest that there has been a mind-boggling collapse in self-employment earnings over the past few years. A report by the Department for Business Innovation & Skills in February estimated that self-employed pay had dropped by 25 percent since the recession. I’d be willing to bet that a lot of them are feeling pretty precarious and insecure at the moment.

Self-employed earnings

Source: The income of the self-employed, Department for Business Innovation & Skills, February 2016

An ONS report published last month found that, while the UK’s persistent poverty rate has fallen, and is now some way below the EU average, the rate of entry into and exit from poverty is relatively high. The chances of falling into poverty are relatively high in the UK but so are the chances of getting out of it. Or, to put it another way, we do a better job of distributing our poverty than a lot of our EU neighbours.


Chart by ONS

What this means, though, is that over a four-year period around a third of the population will have experienced poverty at some point. They might not be poor for very long but they will have had a taste of what it is like.

Years in poverty in the UK in a 4 year period, 2005/08 – 2011/14, percentage population


Chart by ONS

The Joseph Rowntree Foundation called this the “The low-pay, no-pay cycle“, where people have a series of low-paid jobs punctuated by periods of worklessness. That way a lot more people get to have a go at being poor.

And if income insecurity isn’t enough to worry about, housing is less secure than it used to be. Go back a couple of decades and council housing, with its secure tenancies and controlled rents, meant that people knew they had a place to live in even if they were out of work for a period of time. Nowadays, council house tenants are a shrinking minority and the few new tenancies available will no longer be secure.


Source: ONS

Private renting is where it’s at nowadays but the private rental market is even more capricious than the labour market. Its costs are high and rising.

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Chart by Resolution Foundation

Nothing contributes to a sense of insecurity quite like the fear of losing your home. If your rent is eating up more and more of your pay and you have a tenancy that can be terminated at short notice, irregular earnings only multiply the fear. It’s no wonder that people put a premium on regular and secure work.

As Sarah O’Connor reported last month, a survey by Manpower found that even millennials prize job security and the rate of job hopping is well down from where it was before the recession. These days, if you have a job, you hang onto it.

Screen Shot 2016-06-13 at 16.16.06 Chart by Resolution Foundation

It is often pointed out, when those on the left start going on about inequality, that the Gini coefficient for household inequality hasn’t changed much since the early 1990s. It’s true. The 1980s were the years of the steep rise in inequality, as John Rentoul keeps reminding us.

But there are some things the Gini coefficient doesn’t measure*. Someone might be on a good wage yet not be sure how long it is likely to last or if it will be enough to keep them in their home for the next few years. Low paid work has never been a pleasant experience but in 1991, a council tenant with a secure tenancy and a low-paid but permanent (and probably unionised) job would not have felt the same sense of insecurity as his counterpart in 2016, renting privately and on unpredictable pay and hours, even though their real-terms disposable income over a year might be the same. As the Citizens’ Advice report says, insecurity is the overlooked piece of the labour market puzzle. It is this that has made the experience of worklessness and low paid employment that much more frightening for so many people .



*There are all sorts of reasons why it shouldn’t be the only measure of inequality but that’s one for another day.

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6 Responses to Insecurity: the missing piece of the labour market puzzle

  1. ballantine70 says:

    I wonder if it’s the job market insecurity that’s pushing regular pay and pay levels up the priority list? My concern is what this all means for productivity in the long term… if folk are focused heavily on money because the job market (and housng market) are so insecure, will they actually be *motivated* at work rather than merely fearful?

  2. sdbast says:

    Reblogged this on sdbast.

  3. John says:

    What’s so special about Slovenia – does anyone know?

  4. Pingback: Debt news - 19 June · Debt Camel

  5. Dipper says:

    one reason given by people on benefits for not taking slightly higher-paid jobs is that if the job ends then its really difficult to get back on benefits and they cannot risk a gap in income.

  6. Pingback: Brexit: implications for the Scottish labour market – Fraser of Allander Institute

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