This is according to new research from the Resolution Foundation think tank, which analysed the bank accounts of seven million Lloyds Banking Group customers and discovered that three-quarters of salaries fluctuate even after bonuses, promotions and pay rises have been accounted for.
The average monthly dip in earnings was an enormous 20%, accounting for more than the cost of the average monthly food bill (£250).
Low-paid workers were hardest hit, with over four in five of those on a salary of around £10,000 experiencing pay volatility compared with two-thirds of people on around £35,000 a year.
‘Persistent volatility’ – defined as significant changes in monthly wages at least six times a year – affected around 40% of UK workers.
The findings reveal that it is not only those in precarious jobs who experience fluctuations in their salary, but also those in employment traditionally thought of as stable.
“Much of Britain, from our bills to our welfare state, is built around a steady monthly pay cheque. But our research shows this is not the reality of working life for many of us,” said Daniel Tomlinson, Research and Policy Analyst at the Resolution Foundation.
“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.”
The think tank called for employers to provide more notice to workers of their shifts and to avoid “unnecessary use of zero- and short-hours contract”. It urged the government to ensure that Universal Credit is flexible to the wage changes.
However, the Institute of Employment Rights goes further. In our latest report Rolling out the Manifesto for Labour Law, 26 leading labour lawyers and academics recommend reforming the law to guarantee a greater degree of stability for workers.
By reinstating sectoral collective bargaining across the economy, unions can negotiate with employers’ associations for fair wages and conditions for all workers in an industry, regardless of their employment status. Through discussion, both sides can come to an agreement about acceptable pay rates, hours, the use of non-traditional contracts and a whole host of other factors, including training, apprenticeships and dispute resolution procedures.
Zero-hours contracts should be banned and replaced with contracts that provide a minimum number of guaranteed hours per week or month alongside a premium rate for overtime.