The liquidity trap: financial experience and inclusion in the liquid workforce

Gig economy Financial security Financial stress Future of work United Kingdom
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The liquidity trap (report) 1.13 MB

This report examines the financial security for the modern, liquid workforce.

The report finds that ‘liquid’ workers, such as gig economy workers and the self-employed face greater barriers to financial inclusion compared to traditional workers. They are less likely to hold financial products and are almost twice as likely (28%) to be turned down for financial products due to their employment history than traditional employees (15%). 

Research highlights:

  • There is serious concern among workers on zero-hour contracts – they are more than twice as likely (31%) to feel very stressed and anxious about their finances than employees (15%) in the last year
  • The ‘liquid workforce’ are over three times more likely to earn very low incomes than traditional workers, with 22% of liquid workers earning less than £10,000 per year compared to just 7% of employees. However, they are also slightly more likely to fall in a number of higher income brackets
  • Liquid workers are nearly twice as likely (28%) to turn to a payday lender to meet credit needs than employees (16%)
  • Whilst valuing flexibility, almost half of liquid workers (48%) would be willing to sacrifice some flexibility in the way they work for greater financial security – particularly those at the lower end of the income spectrum – whilst 21% of liquid workers would be unwilling to do so.

The report calls for a package of solutions to improve financial security for the liquid workforce, including: a minimum wage, better financial services for people on flexible incomes, a more inclusive welfare system, measures to radically boost pensions take-up, and more support with financial management.

Additional recommendations:

  • An auto-enrolment pension scheme for the solo self-employed with the government acting as their ‘de facto’ employer
  • The government working with organisations, such as trade unions and banks, to establish universal portable benefit schemes for liquid workers
  • A means-tested ‘accountancy aid’ to help liquid workers manage their finances.
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