Unemployed people in the UK have more disposable income than part-time employees and zero-hour workers according to a press release by Scottish Friendly. The report goes on to explain that the unemployed have an average of 9.3% disposable income each month whilst those working zero hour contracts have just 7.8% after expenses.

The government have recently been cracking down on large companies offering zero hour contracts and the latest report by Scottish Friendly certainly adds another string to their bow.

The ‘Disposable Income Index’ outlined by Scottish Friendly shows that the UK’s unemployed have an average of £174 as spending money each month compared to a mere £130 for zero hour contract workers.

But what does this mean for the UK workforce?

According to the office for National Statistics there were 1.4 million workers on zero hour contracts in January this year.

The latest disposable income stats raise valid concerns that these individuals working part-time or zero hour contracts are likely to be financially worse off than if they were not to work at all. This provides very little motivation for those looking to come off of benefits especially when zero hour contracts may be the only jobs available.

Zero hour contracts have caused issues in the past with the government outlining clear concerns over the uncertainty of regular work and lack of progression opportunities.

Calum Bennie, spokesperson for Scottish Friendly shares similar views:

“It’s bad enough that people don’t know what is going to be in their wage packet at the end of the month, but the index shows that for certain workers, there now appears to almost be a disincentive to work.”

In theory the benefit of a zero hour contact is that workers have the option of turning down work if necessary. However, there is often a great deal of pressure within these contracts. As those that turn down work run this risk of not being offered work in the future.

With this in mind, it seems the decision to accept a part-time job or zero hour contract could statistically be an unwise choice if you are currently without work.

Does more disposable income mean increased savings?

With an increase in unemployed disposable income, one could assume that there has also been an increase in the number of people saving money each month. However, during this study there was actually a 2% dip in UK savings.

It seems the government certainly aren’t confident that this disposable income is well spent as in recent months they have been accused of stigmatising benefits claimants for poor spending behaviour. In a recent Conservative Party Conference, Iain Duncan Smith put forward the initiative of ‘Smart Cards’ which will stop claimants from spending money on alcohol, cigarettes, gambling or anything other than essentials. A generalisation that has not yet been welcomed with open arms.

What are your thoughts on zero hour contracts? Is the government giving claimants the best chance of starting work?

The above post is sponsored by Scottish Friendly - a UK ISA provider.


  1. Hi Joe,

    Interesting topic.

    I don’t watch the news, I actually refuse to, and I’m really not a fan of politics. So, I can’t sit here and hold a a really strong argument on the decision the government have made so far and what they should do moving forward. I have a feeling my opinion won’t be popular, but this is how I feel based on my limited knowledge.

    I’m someone that takes a lot of pride in getting where I am today based on my efforts. From £20k in debt, to a £20k+ portfolio in a few years. I took those steps myself without help. I also blame myself and my actions for getting into that position. No-one else was responsible.

    If I’m unhappy with the lack of money I receive from my employer, if I have a bad boss, or if my company don’t value me, then I will work to improve my situation. I will work extra hours, educate myself in evening classes or go back to School.

    What I won’t do is blame the government for my situation. I work in the Outdoor Education Industry. If the government banned Outdoor Ed. I wouldn’t be happy about it of course, but the person I am, would go and find another line of work that I enjoy and that is more stable (if that’s what I’m looking for).

    I’m not the type of person that looks to blame others for my situation. I believe life is just in the end. We are all living the lives WE have built for ourselves. Not what the government have built for us. We live in the best possible age in society to build a life for ourselves.

    I’m not sure I answer your question Joe. I suppose what I’m saying is if people don’t like zero hours contracts, then work hard and intelligently to source a more guaranteed source of employment. With regards to the government. I have no idea how they should help get people off the doll and motivated to work. I have a hard enough time motivating people to work in my job, and they’re motivated people. There’s not one rule that fits all. I have to find what motivates each individual in my team and attempt to engage them in a particular way. I’ve found that If someone doesn’t want to be motivated, they won’t be.

    I don’t envy the government at all!

    I hope my opinions haven’ offended anyone in any way. That is not my intention, I just want to speak my mind on the matter.


    • Hey Huw,

      Thanks for your detailed comment,

      I think we share similar views. I’ve always been a ‘we choose our own fate’ kind of guy. Good or bad, I feel it’s highly important to take responsibility for the situation you find yourself in. Blaming the government, the weather, our finances, our background won’t change the situation – we all have to work with what we’ve got and make something from it.

      Certainly agree with you on the motivation front, a motivated team at work is much easier to achieve via the recruitment process than months & months later through coaching and training!

      On the broader side, a motivated UK workforce? Not an easy switch to flick but there’s surely a smoother transition from welfare to work than to start work only to receive a smaller reward. The solution, who knows? But given we’re spending over £159bn on welfare each year it’s certainly a rewarding problem to fix for whoever can begin to solve it!

      Thanks for stopping by!

    • Hey Huw,

      Interesting comments and to some extent I agree.
      Let’s not forget that not all human beings on this Earth are born with your intelligence, tenacity and will to succeed though.
      Without getting into the whole nature/nurture debate, it is hard to argue that, no matter how hard a small percentage of the population try, they do not have the mental equipment to deal with the better/higher paying jobs, and so will hit a ceiling on what type of job they can get. (Um… and I hope I haven’t offended anyone by saying that!). For these people, surely we can argue that some sort of benefit, or protection from zero hour contracts and the like, are necessary? There are no doubt many out there capable of improving their stations right now who are choosing not to do so either out of lack of incentive or perhaps they feel like their options are exhausted and don’t know where to look (again it is easy to criticise here but I remain sympathetic, many people do need a point in the right direction to get them started down a better path. Is that not one of the reasons we started to blog about FI, for example? 🙂 )
      It is a fine balancing act of course and I echo your statement, I don’t envy the Guv!

      Ermine has just done a post which links into all of this quite well on the case for a Universal Income: http://simple-living-in-suffolk.co.uk/2014/12/the-case-for-a-universal-income … which I am thinking you would be dead against, but personally I think it’s a pretty good idea, if the Guv can come up with a way of making it work!

  2. I actually have mixed views about zero hour contracts.

    Firstly, I see where Huw is coming from, where if the contracts are so rubbish, they should try to try to get something better, that they always have the choice to do so.

    On the other hand, I applaud these people who take the zero hour contracts because at least they are trying to work, to make that step off benefits. The sorts of companies using zero hour contracts (eg Sports Direct) make absolutely millions in profits and I don’t see why they can’t offer a little bit more stability for these people to get on their feet, be able to work longer and regular contracts, get some sustained experience under their belt and then hopefully move on to bigger and better jobs and perhaps off benefits for good.

    • Hey Weenie,

      I can certainly agree in applauding those taking on zero hour contracts. It’s a big step and one that offers very little security.

      Stability and security are such important factors for a job, without providing these the larger companies are surely not giving staff the best chance of developing and providing greater success for the business?

  3. Hi Joe,

    Thanks for the interesting post and bringing this press release to our attention!
    I’m not so sure (or at least very concerned about) the figures being quoted, however.

    Do unemployed people really take home £1,869 worth of effectively after tax benefits per month… EACH!?
    If so then no wonder there is long term unemployment in this country! I might just engineer my lay off right now in fact and declare myself FI as I could easily live off of that 🙂

    Another thing on the income side for those actually bothering to get a job, it is quoting the AVERAGE salary which is a pretty useless figure because it is massively bloated upwards by those in the top earnings bracket. They should have used the median full time salary, which is about £26,500 per annum before tax, which works out to only £1,747.89 per month. So nowhere near their quoted figure of £3193, in fact only just over half of what they have quoted. WTF!

    Further, to then take this and apply the %age of disposable income directly to the average salary is completely retarded, because what about living costs!?!!? I get the point that it “probably” averages all out over the whole country and the range of incomes and living expense arrangements, but that is one hell of an assumption to make.

    Like I say I really enjoyed your article and the subsequent discussion it has brought up, but I am calling BS on the figures on that press release, I am not sure what their agenda is or why they would choose to show deliberately misleading (or just plain useless) figures, maybe their statistician is on a zero hour contract 😉

    • Nice analysis, if £174 is 9.3% then you’re right, take home would be £1869 which gives an annual income of £28.6k. There’s certainly some digging to do to see what’s influenced this figure…

      The average income for full-time are also quoted at a generous £38.3k. I’ve asked Scot Friendly if they can provide some insight into how these have been calculated. I’ll post an update as soon as I can. Apologies!

  4. Very interesting article (and comments). Thanks for posting – it will be good to see an update on the figures if you get one.

    My feeling is that making people totally responsible for their own success (or failure) in gaining well paid employment with decent terms and conditions only works if you have a comprehensive and actively managed set of employment laws and an effective trade union movement. History has proved that employers (and corporations) do not always treat their staff well without the threat of legal sanctions 🙂 Saying that if you do not like your terms and conditions you should just move on is absolutely no help to those who are stuck in a situation where they just do not have that option. Imagine you had kids to feed, no family support system and both partners were already working all hours possible on just enough to keep life ticking over.. There isn’t much room for “self-improvement” in all this, given the cost of childcare whilst you go to classes or the cost of the education itself.

    To be honest those of us who can take control of our own destiny are very lucky. Equality of opportunity (especially in education) is essential, as is the integrity of the employer and without these things we really can’t say that we live in a society where merit and hard work will always win through. In any case even if we do take the view that personal responsibility, not government protection should prevail, ,the state surely still needs to protect children (via their parents), the sick, disabled, mentally unstable and other vulnerable people.

    I love Huw’s positive attitude and I really do wish it worked for everyone but I think we base our society on relying on it at our peril. The existence of exploitative zero hours contracts, very low wages and the general worsening of conditions in employment don’t benefit any of us in the long run, even if we don’t have to directly suffer from them ourselves.

    • Nice comment Cerddidwen.

      Jacob from ERE put it very well when he says that arguments based from a specific persons perspective cannot be extrapolated out to the entire population, and therefore systems cannot be built around them.
      e.g. – “I’m competent and responsible, so I think everybody should be free” – This simply wouldn’t work!


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