Osborne attacks people in tenuous employment

Life on a zero-hour contract looks set to get much harder.

As George writes, unemployed people were the biggest losers in the spending review. The overall welfare bill is to be capped (although pensions, inevitably, won't be included in that cap), and a new raft of punitive measures have been brought in to make unemployment as painful as possible. In full, they are:

  • introducing upfront work search, requiring all claimants to prepare for work and search for jobs right from the start of their claim;
  • introducing weekly rather than fortnightly visits to Jobcentres for half of all jobseekers;
  • requiring all unemployed claimants, and those earning less than the Government expects them to, to wait seven days before becoming eligible for financial support;
  • requiring all claimants who are subject to conditionality to verify their claim every year;
  • requiring all claimants whose poor spoken English is a barrier to work to improve their English language skills; and
  • requiring lone parents who are not working to prepare for work once the youngest child turns three.

All will make life significantly harder for the groups hit by them. But by far the worst are the first and third policies. All claimants will now need to jump a significant hurdle before they can register for benefits – being asked to write a CV, register with the Government’s new Universal Jobmatch service, and start looking for work on day one, as well as having longer [read: more probing] initial interviews with Jobcentre staff. Then, once the hurdle is jumped, there will be a seven-day wait before any funds are actually transferred, up from the three days required now.

A third of British households have no savings at all. Pushing the wait up to seven days will ruin them – or, more likely, drive them into the arms of payday lenders. Robert Peston called it the Wonga budget, and he's not far wrong.

But there's an even more long-reaching effect of the changes. It's counterintuitive, but they will act as a disincentive to work.

In effect, taking short-term work actively costs £71.70. That's how much JSA you lose in the week after you finish your job; and, of course, that's on top of the fact that you can't claim JSA and work more than 15 hours a week.

Here's how that works in practice: you are unemployed, and have the opportunity of temp work at a local event for a week. It will pay £247.60 at the minimum wage. That's an increase of £175.90 over what you would be getting otherwise. Except now you have to take into account that you'll be losing another £71.70 in the week after the posting is over. Suddenly a week's work provides an actual pay increase of barely £100, and even that's neglecting to cover the costs of actually getting to and from work.

Even worse, the news applies to people getting income support on low-or-zero-hour jobs, as well. So, it appears (and we'll have to wait for the details to come out in the wash to be sure) that if you work the sort of job where you work 20 hours one week and 10 hours the next, you will have the wait a further week to get a top-up. By which time you make have worked another 20 hour week and reset the clock again.

That's where this change will really hit home. We've covered the forward march of zero-hour contracts before, but now life is set to get a lot harder for people signed up to this precarious work.

A bartender pours drinks. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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In your 30s? You missed out on £26,000 and you're not even protesting

The 1980s kids seem resigned to their fate - for now. 

Imagine you’re in your thirties, and you’re renting in a shared house, on roughly the same pay you earned five years ago. Now imagine you have a friend, also in their thirties. This friend owns their own home, gets pay rises every year and has a more generous pension to beat. In fact, they are twice as rich as you. 

When you try to talk about how worried you are about your financial situation, the friend shrugs and says: “I was in that situation too.”

Un-friend, right? But this is, in fact, reality. A study from the Institute for Fiscal Studies found that Brits in their early thirties have a median wealth of £27,000. But ten years ago, a thirty something had £53,000. In other words, that unbearable friend is just someone exactly the same as you, who is now in their forties. 

Not only do Brits born in the early 1980s have half the wealth they would have had if they were born in the 1970s, but they are the first generation to be in this position since World War II.  According to the IFS study, each cohort has got progressively richer. But then, just as the 1980s kids were reaching adulthood, a couple of things happened at once.

House prices raced ahead of wages. Employers made pensions less generous. And, at the crucial point that the 1980s kids were finding their feet in the jobs market, the recession struck. The 1980s kids didn’t manage to buy homes in time to take advantage of low mortgage rates. Instead, they are stuck paying increasing amounts of rent. 

If the wealth distribution between someone in their 30s and someone in their 40s is stark, this is only the starting point in intergenerational inequality. The IFS expects pensioners’ incomes to race ahead of workers in the coming decade. 

So why, given this unprecedented reversal in fortunes, are Brits in their early thirties not marching in the streets? Why are they not burning tyres outside the Treasury while shouting: “Give us out £26k back?” 

The obvious fact that no one is going to be protesting their granny’s good fortune aside, it seems one reason for the 1980s kids’ resignation is they are still in denial. One thirty something wrote to The Staggers that the idea of being able to buy a house had become too abstract to worry about. Instead:

“You just try and get through this month and then worry about next month, which is probably self-defeating, but I think it's quite tough to get in the mindset that you're going to put something by so maybe in 10 years you can buy a shoebox a two-hour train ride from where you actually want to be.”

Another reflected that “people keep saying ‘something will turn up’”.

The Staggers turned to our resident thirty something, Yo Zushi, for his thoughts. He agreed with the IFS analysis that the recession mattered:

"We were spoiled by an artificially inflated balloon of cheap credit and growing up was something you did… later. Then the crash came in 2007-2008, and it became something we couldn’t afford to do. 

I would have got round to becoming comfortably off, I tell myself, had I been given another ten years of amoral capitalist boom to do so. Many of those who were born in the early 1970s drifted along, took a nap and woke up in possession of a house, all mod cons and a decent-paying job. But we slightly younger Gen X-ers followed in their slipstream and somehow fell off the edge. Oh well. "

Will the inertia of the1980s kids last? Perhaps – but Zushi sees in the support for Jeremy Corbyn, a swell of feeling at last. “Our lack of access to the life we were promised in our teens has woken many of us up to why things suck. That’s a good thing. 

“And now we have Corbyn to help sort it all out. That’s not meant sarcastically – I really think he’ll do it.”