Monday, October 15, 2018

A mouth to mouth existence

Three-quarters of workers do not receive the same pay from one month to the next, according to a report that says sudden plunges in income are putting low-paid people at risk. The thinktank said this was likely to lead to “increased anxiety and stress as well as more debt, and fewer opportunities to save for the future”.
The Resolution Foundation found pay volatility was particularly acute among the lowest earners and their income was more likely to fall than better-paid people’s. The report, entitled Irregular Payments and part-funded by social wellbeing charity the Nuffield Foundation, concluded that pay volatility was “the norm, not the exception, across Britain’s workforce”.
Workers who experienced a wage cut typically lose £290, more than the average monthly grocery bill, the report found. For those who made less than £10,000 a year, the average was £180, which represented a greater decline in income.
80% of people who earned less than £10,000 a year experienced wage volatility, compared with two-thirds of people who earned more than £35,000. This causes problems for low- to middle-income earners who, the thinktank said, typically cannot save more than £10 a month and have to borrow when their pay falls. It said two in five workers experienced “persistent volatility”, with significant changes in monthly pay at least six times a year.
“Much of Britain, from our bills to our welfare state, is built around a steady monthly pay cheque,” said Daniel Tomlinson, a Resolution Foundation research and policy analyst. “But our research shows this is not the reality of working life for many of us. This volatility is a particular challenge for low-paid workers, who are less likely to have savings to fall back on when their pay packets shrink, and yet are more likely to have big falls in monthly pay. Government and employers should look to support workers by reducing pay volatility, and mitigating its impact on workers’ living standards.”
Irregular wage patterns were found to have profound implications for people on universal credit, which replaces six other forms of welfare with a single monthly payment and is due to be rolled out in full next year. This is because more than 40% of recipients are paid more often than once a month but their income is assessed on a monthly basis.
If they receive two payments for four-week periods within the same month, it could be counted as a 100% pay rise in an universal credit assessment, meaning a steep fall in benefit money. The mechanics of the benefit could put people off seeking additional hours at work because their overall income may fall if they did so, said the report. Struggling homeowners, working single parents and disabled people are already facing cuts of up to £52 a week owing to universal credit, according to analysis by the Policy in Practice consultancy and shared with the ObserverThe Resolution Foundation said allowing claimants to have more flexibility over their assessment periods would mean the new system could help those families who experience volatile pay.

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