‘It’s just not worth it’: why full-time work no longer pays in the UK | Work and career

TTighter rules on benefits have boosted employment in the UK, but have also trapped workers in dead-end jobs and weakened incentives to move from part-time to full-time work, according to the Institute for Fiscal Studies (IFS).

With Britain expected to be the only major industrialized country to see its economy shrink this year amid rising interest rates and higher taxes, the government is scrambling to find ways to boost economic growth.

With Chancellor Jeremy Hunt launching an inquiry into why hundreds of thousands of people have left the workforce recently, and the Treasury wanting to put more people into full-time work, the question of why more people aren’t increasing their hours through a persistent shortage of workers is once again in the spotlight.

More than 8 million people – a quarter of the UK workforce – now work part-time, the latest official figures from the Office for National Statistics (ONS) show.

Senior Tory figures are pressing the chancellor to introduce a raft of measures to help make childcare more affordable so parents can return to work.

In a Bloomberg keynote last month, Hunt urged early retirees and those struggling to find a new job to rejoin the workforce. “We need you and we will consider the necessary conditions to make it worth your while,” he said.

Jeremy Hunt
Jeremy Hunt. In his first major speech as chancellor he declared that “decline for Britain was wrong in the past and it is wrong today”. Photo: Jordan Pettitt/PA

But for more than a decade now, thanks to a series of Conservative policies, full-time working families across the income spectrum have found themselves earning less money than if they were working part-time.

William, 58, a single father from Bedfordshire, is one of many people who told the Guardian they would like to work more but are financially better off by cutting back on their hours.

She works 11 hours a week as a community care worker, visiting elderly clients in their homes.

“I’ve reduced my hours because I get universal credit. If I work a certain number of hours or earn more than £334 a month, my award is reduced. This means that I am not getting paid for some of the hours I worked in real terms.

“My job requires me to use my car and although I get a mileage allowance this is added to my pay and again my UC award is reduced so I’m basically not getting my fuel money.”

William has calculated that he would have to almost triple his hours to 32 a week to be £100 a month better off. “Trust me, I’d like to work more hours, but it’s not worth it.”

She expects she will have to give up care work and find a different job when new rules come into force requiring some Universal Credit claimants to work longer hours.

“If this affects me, I will be forced to leave the caring profession and work in a shop or factory, with no fuel costs. It’s these things that stop people from staying in care and other areas of work.”

Mother-of-two Kate Mitchell, 39, from Guildford, who was on a £40,000-a-year salary at a private consultancy, said unaffordable childcare and the cost of commuting to London had led her to cut back on her hours.

Kate Mitchell, pictured with her two children
Kate Mitchell, pictured with her two children, says there are no financial incentives to work full-time in her professional job. Photo: Kate Mitchell/Guardian Community

Mitchell now works 25 hours, remotely, earning £1,100 a month. It pays nursery costs of around £700 a month, which would rise to £1,595 for a full-time place, including 15 hours of free government-funded childcare a week.

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“Together with after-school fees and travel costs of around £400, I would have to spend more to get to work than I would earn full-time in an office in London, we would be financially worse off than if I did. it doesn’t work at all.

“I now make a profit of around £350 a month. I would love to work more, get back to the career I spent a decade building. I’ve put every kind of ambition on hold, there’s just no motivation to try to win more.”

Some middle- and higher-income couples told the Guardian that punitive childcare costs and income tax meant that part-time work and generating income through property ownership was more financially lucrative than full-time employment.

A couple from Cheshire, a primary school teacher and an engineer, said they had both reduced their hours to save around £2,000 a month in childcare fees, leaving them in roughly the same financial circumstances as when they were working full time.

“I don’t see us ever going back to full-time work as a better work-life balance is invaluable, so I’m worried about our pension contributions,” said one. “I’ve increased mine to cope with the pay cut and we’re looking at getting a rental property to make up the difference.”

Between July 2021 and July 2022, the average UK house price rose by £39,000, meaning many owners earned more money from their home than from their job, as the current average salary for full-time workers in the UK it is £33,000 from November 2022. according to the ONS.

Image of coins in HM Revenue and Customs logo.
Families on middle and higher wages are feeling the effects of the Treasury’s fiscal pullback – resulting in a steady erosion of take-home pay. The chancellor, Jeremy Hunt, has extended the freeze on UK deductions and income tax floors until 2027-2028. Photo: PSL Images/Alamy

EasyJet pilot McKenzie, a father of three, has similar plans: he will soon trade his full-time contract for a part-time one and flip real estate on the side.

“I’m a captain and the only reason I’m still working full-time is because my coffers are low because of the time overseas. I currently contribute the maximum £40,000 into my pension, but in a few years’ time I will definitely go part-time, as a significant number of my colleagues have already done, to avoid paying an effective rate of tax of 62%. [including 2% national insurance, on income between £100,000 and £125,140 due to the loss of the personal tax-free allowance].

“It’s just not worth getting up every day at 3am to work in the job I trained for: I’ll be getting the same take-home pay as I am now – £5,000 a month – going part-time and reducing my pension contributions.

“This government has given us 12 years of fiscal retreat and asset price bubbles, and people no longer see that work pays. It’s firecrackers.”

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