The spikes of austerity

Submitted by AWL on 31 October, 2018 - 11:58 Author: Matt Cooper
stop precarious work

Pay volatility is much greater than has previously been assumed, with the vast majority of workers in stable jobs experiencing significant month-to-month changes in pay.

Low pay comes with spikes.

A recent report by the Resolution Foundation looks at month-to-month changes for workers in stable employment. Previous research has only looked at how workers’ pay varies year-to-year.

The better paid (those earning more that £35,000 take home) see their pay fluctuating month-to-month, but for them it’s mostly a matter of months where they get something extra (a bonus, commission or overtime). The lower paid (those on below £15,000, and particularly those on below £10,000 take home) have the most downward changes in pay, and experience the most and the largest fluctuations. The average downward dip in pay is £290 in a month, more than the average household spends in a month on groceries.

The report does not identify which low-paid workers have the worst fluctuations, but they are likely to be mainly those employed on zero or low hours contracts who often have their hours changed at their employer’s whim.

Men in this wage bracket experience more volatility than women. Maybe a greater proportion of these men are involuntary part-time workers who will do longer hours whenever they can, while some of the women will be balancing work and childcare and not want to increase their hours.

Of course, low-paid workers can least afford to see downward changes in their pay. Most of these workers will spend all their income on essentials. A dip in pay will mean bills unpaid, no phone credit, expensive loans or a trip to the food bank. The better paid are more likely to be able to cover shortfalls with savings or low-cost credit.

The impact of such monthly wage changes on benefits causes further injustice. Many on low-pay will claim benefits. Under Universal Credit (UC) payments should change in line with monthly pay, but there are problems with the way UC calculates this.

UC works on calendar months, but pay is often weekly, fortnightly or four-weekly. In some months a worker may get five weekly pay checks (or three fortnightly payments, or two four-weekly payments). That will reduce the UC they receive, with a time lag that brings the reduction in a month when the recipient is paid less.

A good month may even push someone out of UC entitlement, meaning they then have to reapply, and wait through the reapplication process. Rather than cushioning pay volatility for the low paid, UC tends to accentuate it.

The Resolution Foundation calls for more regulation of low and zero hours contracts, and a new look at the impact of UC.

Further to the left, Guy Standing’s 2011 book The Precariat: The New Dangerous Class offers different but unhelpful suggestions. His “precariat” is a broader group, including the quasi-self-employed and those moving from one temporary job to the next, whereas this report considers only those who gets unstable wages from stable jobs.

Standing assumes the that precariat is here to stay as an emerging new class with different immediate interests from the working class, and will be the basis for both right wing populism and new movements on the left. He suggests that it should have their own (non-trade-union) “voice”, with policies such as the Universal Basic Income (everyone receiving a lump sum every month, irrespective of whether they are in work or not)

Some of the left cherry-pick Standing’s argument, seeing the precariat as a radical section of the working class. The evidence for this is, at best, patchy.

Precarious workers of different sorts are a section of the working class. A lot of workers moving through “precarious” status at times; some, especially migrants, may be consigned to it for a generation.

State reforms are needed — not Universal Basic Income but a living wage, the banning of zero-hour and low-hour contracts, and full rights for part-time workers with the right to increase their working hours permanently if they wish.

The political movement that can win these rights is not some precariat-only “voice”, but all-grade industrial trade unions.

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