Britain has a shrinking economy and a worker shortage – so why aren’t part-time workers increasing their hours?
have also trapped workers in dead-end jobs and weakened incentives to move from part to full-time work, according to the Institute for Fiscal Studies (IFS).
As Britain is expected to be the only major industrialised country to see its economy shrink this year, amid rising interest rates and higher taxes, the government is frantically trying to find ways to boost economic growth.
With the chancellor, Jeremy Hunt, having launched an inquiry into why hundreds of thousands of people have left the workforce recently, and the Treasury keen to get more people into full-time work, the question of why more people aren’t increasing their hours amid a persistent shortage of workers has once more moved centre stage.
More than 8 million people – a quarter of the UK workforce – are in part-time work now, the latest official figures from the Office for National Statistics (ONS) show.
Influential Tory backbenchers are putting pressure on the chancellor to introduce a range of measures to help make childcare more affordable so parents can get back to work.
In a keynote speech at Bloomberg last month, Hunt urged early retirees and those struggling to find a new job to rejoin the workforce. “We need you, and we will look at the conditions necessary to make it worth your while,” he said.
But for more than a decade now, due to a range of Conservative policies, families working full-time across the income spectrum have been finding themselves earning less money than if they worked part-time.
William, 58, a single father from Bedfordshire, is one of several people who told the Guardian that they would like to work more, but are financially better off for reducing their hours.
He works 11 hours a week as a community care worker, visiting elderly clients in their own homes.
“I’ve reduced my hours because I’m receiving universal credit. If I work over a certain number of hours or earn over £334 a month, my award is reduced. This means that I don’t get paid for some of the hours worked in real terms.
“My job requires that I use my car and although I receive a mileage allowance, this gets added to my take-home pay and again my UC award is reduced, so effectively I don’t receive the money I lay out for fuel.”
William has calculated that he would have to nearly triple his hours to 32 a week to be better off by £100 a month. “Believe me, I’d love to work more hours, but it’s just not worth it.”
He expects that he will have to quit care work and find a different job when new rules requiring some universal credit claimants to work more hours come into effect.
“If this affects me I’ll be forced to leave the care profession and work in a shop or factory instead, without fuel costs. It’s those kinds of things that prevent people from staying in the care sector and other fields of work.”
Kate Mitchell, 39, a mother of two from Guildford, who used to earn a £40,000 annual salary in a private consultancy, said unaffordable childcare as well as commuting costs to London led her to reduce her hours.
Mitchell now works 25 hours, remotely, earning £1,100 a month. She pays nursery costs of about £700 a month, which would rise to £1,595 for a full-time place, including 15 free hours of government-funded childcare a week.
“Together with after-school club fees and around £400 commuting costs I’d have to spend more on going to work than I’d be earning full-time in a London office, we’d be financially worse off than if I didn’t work at all.
“I’m now making a profit of around £350 a month. I’d love to work more, to get back into the career I spent a decade building. I’ve put any kind of ambition on hold, there is just zero incentive to try and earn more.”
A number of middle and higher earner couples told the Guardian that punitive childcare costs and income taxation meant that going part-time and generating income through property ownership was financially more 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 about £2,000 monthly in childcare fees, resulting in roughly the same financial circumstances as when they were working full-time.
“I can’t see us ever going back to full-time work as our better work-life balance is priceless, so I do worry about our pension contributions,” one of them said. “I’ve increased mine to counter the reduction in pay and we’re looking into getting a rental property to make up the difference.”
Between July 2021 and July 2022, the average UK house price increased by £39,000, meaning many homeowners earned more money with their house than in their job, as the current average salary for full-time UK employees is £33,000 as of November 2022, according to ONS.
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 properties on the side.
“I’m a captain, and the only reason I’m still working full-time is because my pension pot is small, due to time abroad. I currently contribute the maximum £40,000 to my pension, but in a few years I’ll absolutely go part-time, like a significant number of my colleagues already have, to avoid paying an effective tax rate 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 it to wake up every day at 3am to work in the job I trained for: I’ll have the same take-home pay as I do now – £5,000 a month – by going part-time and reducing my pension contributions.
“This government has given us 12 years of fiscal drag and asset price bubbles, and people no longer see that work pays. It’s crackers.”
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