How can we tackle work insecurity in the UK?

About the research

Building on its earlier work introducing the ‘real Living Wage‘, the Living Wage Foundation (LWF) launched the ‘Living Hours‘ accreditation scheme. The LWF used data in the UK Data Service collection to demonstrate that the Living Hours scheme can play a crucial role in solving the problem of work insecurity and consequently help increase the number of accredited employers.

Key messages

• Research by the Living Wage Foundation on the ‘insecurity complex’ has sharpened understanding of the scale and severity of insecure work in the UK, especially during the Covid-19 pandemic;
• Accuracy of low pay figures has been improved through developing a re-weighting methodology that pegs Labour Force Survey (LFS) data to Annual Survey of Hours and Earnings (ASHE) data;
• By enhancing awareness among businesses and policy-makers of the ‘Living Hours’ accreditation scheme as a solution to the problem of work insecurity, the research has contributed to lasting benefits for employers and vulnerable employees in some of the most insecure regions of the UK.

The challenge

In-work poverty has been a growing problem in the UK over the past two decades. To address this issue, a group of campaigners came together in 2001 to devise an hourly wage sufficient to meet actual living costs – thus giving birth to the ‘real Living Wage’. The real Living Wage is an independently calculated hourly rate, currently standing at £11.05 an hour in London and £9.90 for the rest of the UK. Since its emergence in 2001, the Living Wage campaign has grown exponentially. It is now paid by more than 9,000 employers across the UK, meaning almost 1 in 10 employees in the UK work for an accredited Living Wage employer. The movement has put over £1.6bn into the pockets of low paid workers, and secured pay rises for almost 300,000 workers. It has also influenced the UK Government’s approach to the minimum wage, with the National Living Wage (NLW) – a higher minimum wage rate for employees over the age of 25 – introduced in April 2016.

However, low paid work remains a critical issue in the UK, with 4.8m workers earning less than the real Living Wage. As outlined in our report, ‘The insecurity complex: low paid workers and the growth of insecure work’, the 2008 Financial Crisis led to a significant spike in work insecurity in the UK, and levels of work insecurity have remained consistent over the course of the following decade.

For this reason, the Living Wage Foundation launched ‘Living Hours’ in June 2019. Living Hours is a separate accreditation scheme designed to provide workers with secure hours, predictable shifts and working contracts which reflect actual hours worked, alongside a real Living Wage. The scheme was developed over an 18-month period of consultation with workers, Living Wage Employers, trade unions and experts which culminated in three key measures:

• Decent notice periods for shifts: of at least 4 weeks’ notice, with guaranteed payment if shifts are cancelled within this notice period.
• The right to a contract that reflects accurate hours worked.
• A guaranteed minimum of 16 hours a week (unless the worker requests otherwise).

Our work on the ‘insecurity complex’ aimed to provide further evidence for the need for, and benefits of, the Living Hours scheme. In particular, it used data from the Labour Force Survey (LFS) and Family Resources Survey (FRS) to improve understanding of the scale of low paid work in the UK by assessing who is most impacted by work insecurity and analysing the effects of the Covid-19 pandemic on the insecure job market. Through demonstrating that the Living Hours scheme can play a crucial role in solving the problem of work insecurity, the aim of the research was to help increase the number of accredited employers, bringing about positive change for vulnerable workers in some of the more insecure regions of the UK.

The approach

Our research began by establishing a definition of insecure work as any worker who meets one or more of the following categories:

1. People in non-permanent work (casual, seasonal jobs, fixed term and agency), excluding anyone who said they did not want a permanent job;
2. People who self-report volatile pay and hours including those on zero hours contracts;
3. People who self-report constant pay but volatile hours;
4. Low paid self-employed people.

This definition provided a working ‘Insecure worker’ variable which we could run cross-sectional analysis on, using the comprehensive employee variable set available through the LFS and the FRS (for more information on the variables used, please see the supplementary information page). We adopted this hybrid model as the LFS does not collect income questions for self-employed workers. To avoid duplicating the sample, we used the LFS to evaluate employees exclusively and the FRS to analyse self-employed workers exclusively.

Data limitations

Whilst these datasets – the LFS in particular – are valuable sources for looking at a wide range of employee characteristics, they do have limitations when it comes to studying low paid workers. Only a fraction of the LFS sample report their salaries through hourly pay, meaning that the Survey uses derivation to calculate an hourly rate for those that report through other means (i.e. weekly wages or annual salaries), effectively dividing the yearly/monthly salary by the self-reported average number of hours worked in the reference period. What this fails to account for is the proportion of those hours which are not considered in the respondents’ actual salary; for example, if workers are paid to work 9-5 but have to stay late in the office or take part in unpaid training. As a result, the LFS – if unadjusted – produces inflated figures for the proportion and number of workers earning below the Living Wage, with workers being pulled below the threshold due to their derived hourly pay coming out much lower than their actual hourly rate.

A new methodology

Whilst wanting to utilise the breadth of variables available in the LFS in our research, a key priority was to avoid relying on these inflated figures, which can lead to inaccurate results. We therefore developed a new methodology that involved re-weighting the LFS pay data, using Annual Survey of Hours and Earnings (ASHE) data (accessed via the Office for National Statistics (ONS)) to calculate the scale of the re-weight. Whilst the ASHE has less detailed information on employee characteristics, it collects actual hourly rates based on employer PAYE figures and so avoids derivation issues.

We wanted our re-weighting factor to cover all employees in the LFS, so we used sex and working hours as our calculation factor. To start with, we ran the LFS analysis on what proportion of each category earned below the Living Wage, including full time men, part time men, full time women and part time women respectively. We did this using the unweighted samples in the first instance, and then applied weights to calculate what the initial weight factor was. We then compared these to the figures in the ASHE data for each equivalent category to calculate the difference. That difference was our re-weighting factor, and from that, we used a series of IF statements to compute a ‘new weight’ which was effectively the original weight multiplied by the difference between the LFS and ASHE figures when applied to workers of different genders and working hours. For more information on the weights used, please see the supplementary information page. By re-weighting the data, we were therefore able to retain the breadth of employee variables in the LFS, without compromising on accuracy of hourly pay figures.

For a more detailed outline of the methodology, please see Annex 2 of the ‘Insecurity complex’ report.

Data used from the UK Data Service collection

Quarterly Labour Force Survey, all 20 quarters from 2016-2020

Family Resources Survey, 2016-2020

The UK Data Service has been crucial to our research. The Service has provided us with the means to access the relevant labour market data needed to study low pay and insecure work. A practical benefit of having a Service account is that the system allows researchers to store the relevant datasets in a single project file, which helps with ease of data use and retrieval. Without this access to the data, our labour market research would be significantly more difficult.

Research findings

Our research provides a comprehensive account of the scale and severity of insecure work, including crossbreaks by region and sector, whilst also highlighting the demographic spread of who is most likely to face work insecurity. Key findings include:

• A fifth (21 per cent) of workers in the UK experience work insecurity – that’s 6.6m workers across the country. Of the 6.6m insecure workers, more than half (56 per cent) earn less than the real Living Wage – that’s 3.7m workers in insecure work and earning below the Living Wage.
• Insecure work is unevenly spread among regions of the UK. Wales and North East have comparatively high levels of insecure workers (26 per cent and 25 per cent respectively), while Scotland, South East and London all have slightly lower proportions (20 per cent, 19 per cent and 18 per cent respectively).
• Work insecurity is more prevalent in certain sectors – ‘Agriculture forestry and fishing’ and ‘Accommodation and food services’ both have higher proportions of insecure work (52 per cent and 39 per cent respectively), while the ‘financial and insurance activities’ profession has a much smaller insecure work population in proportional terms (7 per cent).
• Males and females experience similar levels of insecure work, with 21 per cent of working males experiencing insecurity compared to 20 per cent of working females. That said, female workers are more likely to experience certain forms of insecurity compared to males – such as having a temporary job or being underemployed, while males are more likely to be in low paid self-employment.
• Insecure work impacts workers of certain ethnic groups more than others. For example, 41 per cent of Bangladeshi workers experience work insecurity, while the same is true for around a third (33 per cent) of Pakistani workers and 28 per cent of Black Workers. All of these are well over the total UK average of 21 per cent. Contrastingly, a small minority (11 per cent) of Chinese workers are in insecure work. Other low insecurity groups are Indian workers (16 per cent) and white workers (19 per cent).
• Disabled workers are at a higher risk of experiencing work insecurity than non-disabled workers. For example, more than a quarter (26 per cent) of disabled workers are in insecure work compared to 20 per cent for those without a disability.

The impact

As previously mentioned, the ‘Insecurity complex’ report is part of the ‘Living Hours’ accreditation scheme which aims to use accreditation as a means of securing predictable, reliable and secure work through the Living Hours measures (sufficient notice for shifts, a secure contract and a guarantee of 16 hours of work per week unless the employee opts out). Key impacts arising from the research include:

Raising awareness of Living Hours as a prevention mechanism for work insecurity

A key objective of the research was to use the findings to raise awareness of the campaign and drive further accreditations. The press and communications work around the report did so successfully, with the report securing coverage in high profile print and broadcast media (see links below), with an Ad Value Equivalent (AVE) of £315,733.84. Similarly, social media assets used to supplement the report had a combined user reach of 136,000. In some cases, the infographics and graphs used in our social media posts were included in the articles themselves.

Increasing Living Hours accreditations to improve insecure workers’ contracts

Increased awareness of the issue helped us secure further accreditations, and since the report was published we have increased our number of employer accreditations by 80%, including large employers like Spareroom. As a result, we’ve uplifted an additional 170 employees onto Living Hours contracts, with around 32,000 employees now working for Living Hours employers. Since then, we have set even more ambitious targets. We aim to have a total of 21 Living Hours employers by the end of the 2021-2022 financial year, and 50 by 2022-2023.

Enhancing local government policy to create lasting benefits for insecure workers

Through our press and communications work for the report, we were able to secure supportive comments for the Living Hours scheme from the respective leaders of the Greater London Authority (GLA) and the Greater Manchester Combined Authority (GMCA), Sadiq Khan and Andy Burnham. Crucially, each of these Mayors have committed to uplifting workers onto Living Hours contracts, with Sadiq Khan agreeing to work with the LWF to make the entire GLA umbrella a Living Hours employer, while Andy Burnham has pledged to have every employee in the Greater Manchester City Region offered Living Hours by the end of the decade. Living Hours is also now listed on the Greater Manchester Good Employment Charter website as a ‘quality standard’ that demonstrates ‘good practice’ in achieving secure work. This is a particularly useful example of our research leading to impactful policy change, particularly as the research found workers in the north of England were more likely be in insecure work than the UK as a whole.

Next steps

In the near future, we will be conducting further research, with a particular focus on the ‘insecurity premium’. The insecurity premium is the additional costs associated with being in insecure work, such as by having to pay extra childcare and/or transport for last minute shifts or losing income due to shifts being cancelled without compensation. While we have not yet developed our full approach to this, there is no doubt we will be using the LFS via the UK Data Service to calculate the scale of insecure work, average wages among insecure workers and typical hours worked, all of which will feed into our calculation on the scale and potency of the insecurity premium.

Read the research

Richardson, J. (2021). ‘The Insecurity Complex: Low Paid Workers and the Rise of Insecure Work’. The Living Wage Foundation.

More information on the ‘Living Hours’ accreditation scheme can be found on the Living Wage Foundation website or by emailing the Living Hours team.

Related links

Examples of high profile media coverage include the following:

Independent: Living Wage Foundation rails against insecure work as Labour belatedly wakes up (28 July 2021)

Daily Mirror: Millions of works trapped in insecure jobs (29 July 2021)

Daily Mail: Millions trapped in low-paid, insecure work, study suggests (29 July 2021)

The Big Issue: Mass insecure work leaves families ‘struggling to keep heads above water’ (29 July 2021)

HR Magazine: Millions of UK employees trapped in low paid and insecure work (29 July 2021)

Research funding and partners

Founding partners of ‘Living Hours’ are: Aviva, Richer Sounds, SSE and abrdn.

Supplementary information on variables and weights for case study: ‘How can we tackle work insecurity in the UK?’

Supplementary information on variables

The researchers used the following employee variables to run cross-sectional analysis on the defining categories of our insecure worker variable:

For more information on the LFS variables, please refer to the variables documentation available on the Office for National Statistics (ONS) Labour Force Survey – User Guidance webpages.

For more information on the FRS variables, please refer to the variables documentation available in the UK Data Service catalogue.

Supplementary information on weights

When re-weighting the LFS data using ASHE, the researchers used the PIWT18 – Person Income Weight. For more information on this weight, please refer to the Labour Force Survey – User Guide.