One in six UK workers is currently facing difficulties in paying their bills at the end of each month, according to a significant new study highlighting the persistent effects of the cost of living crisis, even as inflation decreases and real wages begin to rise. New data from the Work Foundation at Lancaster University indicates that 17% of workers surveyed regularly struggle to meet essential expenses. Additionally, 40% report having little or no disposable income left for savings, holidays, or emergencies.
The findings coincide with separate data from the Office for National Statistics, which shows that more than a quarter of UK adults, 26%, cannot afford an unexpected but necessary expense of £850 — the highest proportion since September 2024.
Ben Harrison, director of the Work Foundation, emphasised that Britain’s entrenched pay stagnation continues to affect daily life for millions. “Raising living standards is not just about figures on a spreadsheet — it’s about workers feeling financially secure,” he stated. “Four years on from the start of the worst cost of living crisis in a generation, our analysis shows workers continue to feel the impact of nearly 20 years of stagnating pay packets.”
The strain on household finances is leading to a significant increase in the number of workers taking second jobs. Official data reveals that 1.23 million people are now juggling multiple roles — the highest number on record and a 10% increase from the previous year. “Second jobs are sometimes glamorised as side hustles or optional extras, but economic necessity is often the key motivation,” said Harrison. “Despite a period of sustained pay increases, many workers still aren’t earning enough in their main jobs to cover essential costs.”
Younger workers are particularly vulnerable. Half of all 16- to 24-year-olds surveyed expressed concern about losing their job in the next 12 months, amid a broader slowdown in the UK labour market. The unemployment rate has risen to 4.6% — a four-year high — and both vacancies and payroll growth have decelerated due to rising payroll taxes and persistently high interest rates.
Although recent wage growth has surpassed inflation for the first time in years, expectations for real pay rises remain low. Only 25% of older workers aged 55 to 64 believe they will receive a pay increase above inflation this year.
With consumer demand still fragile and real incomes under pressure, these findings are likely to intensify calls for the Bank of England to accelerate interest rate cuts to reduce borrowing costs and boost confidence. Markets are now anticipating a quarter-point rate cut as early as August, although the Bank has indicated it seeks clearer evidence of cooling wage growth before making further decisions.
Economists suggest that these figures underscore the disconnect between headline indicators — such as GDP and inflation — and the real-life experiences of millions of workers. As Harrison noted: “We need a shift in focus from short-term fixes to long-term solutions that genuinely improve the financial security and quality of life of working people.”
