Four out of five working people in the UK (80%) worry that inflation will outstrip their future pay, the RSA has warned.
A survey of more than 2,000 people commissioned by the Royal Society for the encouragement of Arts, Manufactures and Commerce, in conjunction with Nottingham Civic Exchange, found that economic concerns spanned a range of income groups, including those who claimed they were comfortably saving.
They suggested that workers who feel their economic security is low find it more difficult to find productive uses for their skills, which slows progression in the workplace and will in turn reduce economic growth.
The living wage
Their Addressing Economic Security report recommended that a universal basic income could be introduced to complement pay, which it suggested would provide all working people with the ability to predict their income and the potential to save.
The RSA – whose chief executive Matthew Taylor produced the Taylor Review of modern working practices last year – said the universal basic income would be paid to every eligible adult and child, and would help support them while working or studying.
The report argued that a new focus on economic security was needed to meet the challenges that workers in the UK are likely to meet in the 2020s, when more routine jobs are expected to be automated. Last week, the Institute for Fiscal Studies warned that the rising national living wage could see some lower-paid roles replaced by machines.
Atif Shafique, senior researcher at the RSA, said: “Having a job is no longer a guarantor of economic security. More than seven million people in working households live in poverty, wage growth lagged behind inflation for most of the last decade, and close to eight million people in the UK live with problem debt.
“Ten years after the crash, and we need a step-change. Community, place, identity and personal responsibility all have an important role to play.”
Automation, an ageing population and uncertainty arising out of Brexit could make workers’ financial worries worse, the report suggested.
It found that a third of people who categorised themselves as “just about managing” their finances had a household income of more than the national average (£34,000).
TUC general secretary Frances O’Grady commented: “Working people are in the middle of the longest pay squeeze since Napoleonic times, with real wages still lower than before the financial crisis.
“The pay crisis should be the government’s first priority. We need a plan to get wages growing with more investment, and a higher minimum wage. And we need stronger rights for trade unions, so that workers can negotiate the pay rises they have earned.”