Figures show zero hour contracts, insecure work and low pay having impact on Scots ability to save for the future
LOW PAY, zero hour contracts and insecure work are diminishing the saving power of people in Scotland, which is among the weakest in the UK, a new report by online investment service Wealthify has found.
According to its findings Scotland ranks second to last in a poll of the UK’s top savers, with the average woman in Scotland holding just a week’s salary in reserve.
The data also showed that women in Scotland save less than half the amount men do and 10 times less than parts of England; prompting academics and charities to suggest that a universal basic income (UBI) could address the gender imbalances in the economy and unfairness of zero hour contracts.
“The only real policy solution would be Universal Basic Income, – which would not only mitigate against income insecurity but tackle poverty effectively and lead to a huge economic stimulus.” Kirstein Rummery
Kirstein Rummery, professor of social policy at the University of Stirling said: “It is clear that several factors are coming together to make the financial situation particularly precarious for groups of Scots.
“The pay freeze in the public sector and the rise of zero hours contracts means that income is stagnant or unreliable for many low paid workers – disproportionately women, particularly in the public sector.
“The withdrawal of benefits from disabled people, the sanctions imposed on many unemployed people, and the withdrawal of social care services due to funding constraints has a huge impact on many disabled people, carers and their families.
“When you add to rising housing, childcare and transport costs in a time of income stagnation particularly for lower income groups then you have a ‘perfect storm’ of income insecurity that mitigates against savings.”
The debt level of a typical Scottish household had risen to a level of £4,000 by 2016.
London, Wales and the East Midlands were named as the best savers in the UK by the Regional Savings Index (RSI), which compares average savings to average earnings and shows how many weeks average breathing space people in each region have in their savings.
The study, carried out last month by research group Opinium, asked 1000 people aged 18 to 55 who all earned under £50,000 for details of their financial security.
Campaigners have also long made a connection between poor pay and the ability of workers to save and be secure. The average amount of debt held by individual households across Scotland over the past eight years has increased by 65 per cent according to the Scotland Institute.
In 2008, the debt level of a typical Scottish household apparently stood at £2,200 but had risen to a level of £4,000 per household by the early weeks of 2016.
“If EU membership and a policy proposal like a Universal Basic Income were part of that deal, I think that would remove much uncertainty and prove a more attractive option for potential voters.” Kirstein Rummery
Although Scotland has the lowest proportion of people on a zero hours contract of all the nations of the UK, on 2.2 per cent compared to the as a whole on UK 2.5 per cent; the number still stands at 59,000.
Women tend to be more affected by cuts that fall on the public sector and by the entrenched pay gap and the fact that women represent 75 per cent of those in part time work. Additionally, 42 per cent of women employed in Scotland work part-time compared to 13 per cent of men in Scotland. On average women in Scotland earn £175.30 per week less than men.
“Women are also twice as dependent on social security, and are twice as likely to give up paid work to care for children or family members, meaning they bear the brunt of austerity measures.” Engender
When discussing a solution to the current wage, debt and pension crisis, Rummery stated: “The only real policy solution would be Universal Basic Income, which would not only mitigate against income insecurity but tackle poverty effectively and lead to a huge economic stimulus.
“It would remove income insecurity and facilitate saving and investment; an option which the Scottish Government is exploring – but I would judge is unlikely to be part of the welfare landscape in the near future.
“This is a shame, given the probably impending focus on a second independence referendum. For if EU membership and a policy proposal like a Universal Basic Income were part of that deal, I think that would remove much uncertainty and prove a more attractive option for potential voters.”
A spokesperson from Engender said: “We aren’t surprised that women are finding it so difficult to save in Scotland. Women on average earn less money, have less job security and worse access to pension savings than men.
“Women are also twice as dependent on social security, and are twice as likely to give up paid work to care for children or family members, meaning they bear the brunt of austerity measures. The savings gap highlights the wider economic inequality faced by women in Scotland.”
Picture courtesy Ken Teegardin
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