The link between employment and economic security has ‘fundamentally broken', according to a study from think tank the RSA (Royal Society for the Encouragement of Arts, Manufactures and Commerce).
Addressing Economic Insecurity found that four in five working Brits (80%) worry inflation will outstrip their pay. The report was produced in conjunction with Nottingham Civic Exchange and follows RSA chief executive Matthew Taylor’s employment review. It argues that a new focus on 'economic security' is needed to meet Britain's challenges going forward.
The study found that fears around shrinking real-term pay affect not just those on low incomes but all groups, including those 'not managing' (82%), 'just about managing' (85%), 'just saving' (79%), and 'comfortably saving' (76%).
However, ‘just about managing’ individuals worry more about pay, progression and in-work poverty than any other group – even the poorest. The report found that 45% of the ‘not managing’ feel they have progressed but only 37% of the 'just about managing' (JAM) do, which shows a job is not the only solution to economic security, the report stated.
Personal debt worries 67% of those 'not managing' and 50% of people JAMs, the study found.
High housing costs are the biggest concern for those 'not managing' (87%) and JAMs (85%), and are also an issue for those 'just saving' (81%) and those 'comfortably saving' (71%), the report revealed.
Report author Atif Shafique, senior researcher at the RSA, commented: “Having a job is no longer a guarantor of economic security: more than seven million people in working households live in poverty, wage growth lagged behind inflation for most of the last decade, and close to eight million people in the UK live with problem debt.
“Ten years after the crash we need a step-change. Community, place, identity and personal responsibility all have an important role to play.”
Paula Black, director of Nottingham Civic Exchange at Nottingham Trent University, said that the report highlights the subjective element of economic security – whereby two people with the same jobs and the same income can both have, or feel they have, very different prospects.
“As policymakers increasingly discuss ordinary working families it is important they understand the way that economic insecurity affects their lives and that the subjective element of how people feel is important in this,” she said.
TUC general secretary Frances O’Grady said: “Working people are in the middle of the longest pay squeeze since Napoleonic times, with real wages still lower than before the financial crisis… We need a plan to get wages growing with more investment, and a higher minimum wage. And we need stronger rights for trade unions so that workers can negotiate the pay rises they have earned.”
The report highlighted the vicious cycle of economic insecurity; with people who have low economic security struggling more to find productive uses for their skills. The report’s recommendations included a Universal Basic Income at a national scale or the combination of alternative and localised welfare provision, alongside more intensive support for navigating the labour market.