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2.3m Brits are on flexible incomes and battling with debt

27th March 2015 Print

Research focusing on fluctuating incomes and the impact it has on people’s ability to make debt repayments shows that many people are struggling to meet their financial commitments because of “zero hours” contracts.

According to research conducted on behalf of debt advice and solutions provider Debt Advisory Centre (DAC), three in 10 (29%) British workers say they have a job where they don’t always work the same hours – meaning their income can fluctuate from week to week. Of those with fluctuating incomes, a fifth (19%) say they are on zero hours, flexible or temporary contracts.

A zero hours contract is one where the employee has no minimum contracted hours, meaning that the employer doesn’t have to give them any shifts to work in the week. For those covering several bills, this can make it very difficult to manage their finances. In fact, two-thirds of those on fluctuating incomes say they have trouble meeting all of their financial commitments.

Separate research for DAC carried out in January found that 1 in 6 (16%) Brits consider themselves to have a debt problem, the equivalent of 8 million people across the UK. This suggests that a potential 2.3 million people with variable incomes may be struggling with a debt problem.

Research for DAC also found that one in 15 (7%) people who have unsecured borrowing spend over half of their take-home earnings on repayments each month, including credit cards, personal loans, catalogue debts, store cards, and payday loans. On average, borrowers spend around 20% of their income on repaying their unsecured debts each month. For one in eight (12%) people, their housing costs (mortgage or rent) account for half or more of their monthly income - something that can cause real difficulties for people who aren’t earning the same amount every month.

Ian Williams, spokesman for DAC, says: “More and more workers have no certainty about how much work they will get each week or month, and therefore how much they will earn. This makes budgeting for regular bills and living costs, as well as debt repayments, extremely challenging.”

“Those trying to cope with problem debts whilst managing a flexible income should be aware that they don’t have to put up with it alone – they can seek help. Speaking to an independent source of debt advice could help them to get back on their feet and work through their financial difficulties.”