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Part time workers increasingly financially vulnerable

April 6, 2016

New figures from StepChange Debt Charity show that people contacting it for debt advice are increasingly likely to work part time rather than full time. The charity also says that a third of those part time workers now owe money on their essential household bills, including rent or mortgages and Council Tax.

The data, released today as part of the charity’s annual Statistics Yearbook, show a significant shift in the employment status of people seeking help. Nearly one in five people who came to the charity for help in 2015 were in part time work (19%), compared to 16% four years ago. Over the same period, the proportion in full time work dropped from 34% in 2011 to 30% in 2015.

The figures also include information on how many of the charity’s full time and part time clients have arrears on their most important household bills[1]. Part time workers were more likely than full time workers to be in arrears on each bill, with around a third owing money on their mortgage or rent, water and Council Tax and one in six behind on their gas and electricity bills.

There were some dramatic differences between full time and part time workers in terms of the numbers in arrears on rent and Council Tax. A third of the charity’s part time clients owed money on their rent compared to just 22% of full time workers. The figures for Council Tax were 37% and 28% respectively.

Part time workers more vulnerable to problem debt

Recent research by StepChange Debt Charity has highlighted how certain types of work, including part time, can leave people more vulnerable to changes in circumstances such as volatile incomes, a reduction in working hours or job loss, which can affect their finances and tip them into debt. These ‘income shocks’ can have a severe impact, with people left trying to bridge the gap between their income and their essential bills, and people working part time are more likely to suffer. Figures from the charity showed that 42% of the UK’s part time workers had suffered an income shock in the last 12 months, compared to just 29% of those working full time.

When people suffer a shock to their income, many feel they have no choice but to turn to credit and for too many, this leads to severe problem debt. StepChange Debt Charity research shows that 14 million people suffered a shock to their income in the last year and 4.5 million had at least two. Around 6.5 million people used credit to cope after an income shock and this left them 20 times more likely to fall into severe problem debt.

Part time workers were also over-represented last year among StepChange Debt Charity clients compared to national figures[2]. They represent 19% of the charity’s clients, but only 17% of UK adults work part time. Full time workers make up 30% of clients compared to 45% of people nationally.

Mike O’Connor, Chief Executive of StepChange Debt Charity, said:

“The pressure of trying to manage a budget that is stretched to the limit can be difficult at the best of times, but for those with insecure work, volatile incomes and little or no savings, it can be overwhelming. These are already facts of life for millions of people and their numbers continue to increase.

“We urgently need more effective safety nets to support people when their income drops to prevent them from falling into difficulty. We also need to ensure that everyone has the support they need to build up precautionary savings for when the worst happens.

“The recent Government announcement on savings is an important step, but it will not completely solve the problem. With £1,000 in savings, half a million families would be prevented from falling into problem debt and this needs to become the reality, not just an aspiration.”

About the annual StepChange Debt Charity Statistics Yearbook

StepChange Debt Charity’s Statistics Yearbook provides a look into the lives of half a million people in problem debt in the UK. It looks at the demand for debt advice and where this demand comes from.

It also examines trend data, including detailed breakdowns of types of debt, arrears on household bills and key demographics of those in debt. The data is drawn from the details of 20.5 million calls and over three million clients. 2015 figures are based on the 307,043 new clients that year.

Full copies of the 2015 Statistics Yearbook are available here.

Notes to editors:

  1. The most important household bills are defined as mortgage/rent, Council Tax, water, gas and electricity.
  2. www.ons.gov.uk

Contact the StepChange news team on:

Tel: 0207 391 4598

Mobile: 07985 404 153

Email: press@stepchange.org

Follow our press team on Twitter: @StepChange