Financial insecurity is deepening among UK workers paid below the real Living Wage, with 31% now having no savings and just 10% able to cover an unexpected £200 bill from their current income, new research reveals.
Almost a third of low-paid UK workers now have no savings at all, as years of cost-of-living pressure continue to erode household financial resilience. New research from the Living Wage Foundation finds that 31% of workers paid below the real Living Wage have no savings, up from 24% in 2025. That represents a 29% increase in the proportion of low-paid workers with no financial safety net in just one year.
The findings, from the Foundation’s Life on Low Pay 2026 report, are based on polling of more than 2,000 UK workers paid below the real Living Wage, currently set at £13.45 an hour across the UK and £14.80 in London. The Foundation estimates that around 4.4 million UK workers are currently low paid.
Perhaps most strikingly, just one in 10 workers on low pay said they could cover an unexpected £200 bill from their current income without difficulty. A broken washing machine, urgent car repair or unexpected vet bill could therefore be enough to push many low-paid households into debt or force them to cut back elsewhere.
FINANCIAL SAFETY NETS ARE DISAPPEARING
The report suggests low-paid workers are becoming less financially resilient, even as headline inflation has eased. Two-fifths (40%) say they feel worse off than they did in 2025. And 59% do not expect their pay to keep pace with living costs over the coming year.
“While inflation may have fallen, this research shows many low-paid workers continue to be impacted by the cost-of-living crisis. More people are running out of savings, relying on debt, and experiencing hardship than a year ago,” noted Emily Sawh, Co-director of the Living Wage Foundation. “Nearly one in three workers now have no savings at all. That leaves millions of people with little protection against unexpected bills or future rises in household costs. The real Living Wage remains one of the most effective ways employers can help workers build greater financial security and stability.”
The findings echo wider evidence that financial insecurity is increasingly spilling into the workplace. Fair Play Talks recently reported that more than half of workers cannot afford a $500 emergency as financial stress hits workplace performance, with financial pressure affecting attendance, concentration and productivity. Closer to home, six in 10 UK workers say money worries are harming their health, underlining the close relationship between financial resilience and overall wellbeing.
STRUGGLING TO PAY BILLS
Managing basic household costs is already a struggle for most low-paid workers. The Living Wage Foundation found that 81% struggle with or are unable to pay some or all of their bills.
After covering essential costs such as food, housing and utilities:
- 22% have less than £10 left each week.
- 17% have nothing left or are further in debt.
That latter figure has risen by 42% compared with last year. These findings suggest the financial pressure on low-paid workers is not being driven simply by poor budgeting or unexpected spending.
For many, income is simply failing to stretch far enough to cover basic living costs. Research from the CIPD found that one in five employees believed their employer was not doing enough to support financial wellbeing, while 12% said their pay was insufficient to maintain an acceptable standard of living without going into debt for food or bills.
CUTTNG ESSENTIAL SPENDING AND MAKING DIFFICULT TRADE OFFS
Low-paid workers are increasingly making difficult trade-offs simply to get through the month. In the past year, 61% of those surveyed said they had either cut back on food or heating, fallen behind on bills or housing payments, or taken out a payday loan to cover essentials.
The findings illustrate how quickly financial insecurity can escalate. Once savings disappear, even a relatively modest unexpected expense can force people to borrow, miss payments or go without necessities.
“These findings reflect what we see week in, week out at Chipping Barnet Foodbank. People who are doing everything right, working, budgeting carefully, are still ending up at our door because their wages don’t stretch far enough to cover rent, food and bills,” said Victoria Miller, Foodbank Manager at Chipping Barnet Foodbank. “Through our advice and employment support we’re increasingly seeing people who are in work but unable to build any savings or absorb an unexpected cost. A real Living Wage would mean fewer working households having to choose between heating and eating, and fewer of them needing a foodbank at all.”
EMPLOYMENT NO LONGER GUARANTEES FINANCIAL SECURITY
The report also raises a wider question about the extent to which paid employment still protects people from poverty and hardship. “The findings of this report reflect what we see every day at Citizens Advice Newcastle. With one in three households we support who are in a negative budget including someone in work, and more than half of those households having someone working full time, it is clear that employment alone is no longer a guarantee of financial security,” shared Tracy Armstrong, Chief Executive of Citizens Advice Newcastle.
“Our advisers are supporting growing numbers of people in work who are struggling to afford essentials such as food, energy and housing costs, and who are being forced to make impossible choices about which bills to pay and what they can go without. We are also seeing increasing levels of debt and financial hardship among working households who have little resilience to cope with rising living costs.”
Armstrong believes that paying the real Living Wage “would make a significant difference, helping people to meet their basic living costs, reducing financial stress and debt, and giving working households greater stability and security”. “It is an important step towards tackling in-work poverty and ensuring that work provides a genuine route out of hardship,” added Armstrong.
That warning is consistent with wider workplace studies. Research that poor mental health among UK workers has risen 66% since 2009, with the Mental Health Foundation identifying financial security as one of the strongest determinants of mental health. Separate research also found that almost two-thirds of US workers are anxious about money, with workers who lack emergency savings reporting much poorer mental health and productivity.
NO MONEY, NO SAFETY
The human impact of having no financial buffer is captured by Megan, an education worker who took part in the Living Wage Foundation research. “I find it difficult to think about the fact that I work full-time and I do sometimes hours that aren’t sociable hours, and that I don’t get to spend any money at all on anything that’s enjoyable,” said Megan. “We haven’t had a washing machine for eight weeks. We don’t have just £500 sitting there… because there’s no money there, there’s no safety. I’ve not saved any money since 2021. Every day is just that little bit more negative, and you’re that little bit more isolated because you simply can’t afford basic things that you should be able to.”
Her experience illustrates why emergency savings are increasingly becoming an important measure of financial wellbeing. Savings do more than fund major purchases. They create a buffer that allows households to absorb ordinary life events without immediately turning to debt. Without that buffer, relatively small financial shocks can quickly become crises.
FINANCIAL STRESS DOES NOT STAY OUTSIDE THE WORKPLACE
The implications also extend to employers. Financial stress can affect concentration, health, absence, morale and productivity. Studies have confirmed that employee health, morale and productivity fall as financial stress rises. That research found financial pressure affecting workers’ ability to focus, sleep, remain healthy and feel satisfied at work.
More recent research found workers without emergency savings were substantially more likely to report declining productivity, while many had delayed essential purchases or missed work because of financial problems. Financial wellbeing therefore increasingly needs to be treated as a workplace issue, rather than something employees should simply manage privately.
FAIR PAY IS A RESPONSIBLE BUSINESS ISSUE
The findings also reinforce the wider responsible-business case for fair wages. Fair Play Talks has previously reported that fair wages and fair working conditions are among the factors most likely to influence consumers’ purchasing decisions. Pay practices influence not only household finances, but also employee trust, retention, reputation and organisational credibility.
Recent reports have similarly highlighted how fair pay increasingly sits at the intersection of equality, employee trust and responsible business. For organisations committed to responsible business, the question is therefore not simply whether wages comply with the legal minimum. It is whether employees can realistically meet the cost of living from the wages they receive.
WHY THE REAL LIVING WAGE MATTERS
Unlike the statutory National Living Wage, the real Living Wage is calculated independently according to the cost of living. The current voluntary rates are £13.45 across the UK and £14.80 in London.
The Living Wage Foundation argues that paying these rates can help workers build greater financial resilience and reduce reliance on debt, foodbanks and emergency support. The findings arrive ahead of the announcement of the new real Living Wage rates on 15 October. That announcement will come at a time when the majority of workers currently paid below the rate already believe their earnings will fail to keep pace with rising costs.
WHAT EMPLOYERS SHOULD DO NEXT
The findings suggest employers should treat financial wellbeing as part of their wider workforce strategy rather than simply another employee benefit.
Organisations should consider:
- Reviewing whether pay reflects the real cost of living, particularly for the lowest-paid employees.
- Considering accreditation as a real Living Wage employer where financially possible.
- Reviewing contracted hours and income security, as low hourly pay can be compounded by unpredictable or insufficient working hours.
- Assessing whether employees are experiencing in-work poverty, including through engagement surveys or anonymous financial wellbeing measures.
- Examining access to emergency savings, including payroll-linked savings schemes or other ways to help employees build financial buffers.
- Providing access to independent debt and financial advice for employees who need support.
- Reviewing benefits through the lens of lower-paid workers, ensuring they address real needs rather than simply providing perks used primarily by higher earners.
- Avoiding over-reliance on financial education when the fundamental issue is insufficient income.
- Training managers to recognise the effects of financial stress on wellbeing, attendance and performance.
- Looking at pay alongside mental health and workplace wellbeing, rather than treating each area separately.
Financial education can help people make informed decisions. But no amount of budgeting advice can compensate for wages that consistently fall short of essential household costs.
WORK SHOULD PROVIDE A ROUTE OUT OF HARDSHIP
The latest findings present a difficult picture of low-paid working life. Almost one in three workers paid below the real Living Wage have no savings. Only one in 10 could comfortably absorb a £200 unexpected bill from current income. More than eight in 10 struggle with bills. Around one in five have less than £10 left each week after necessities. And 61% have cut food or heating, fallen behind on payments or borrowed simply to cover essentials.
These are not isolated signs of financial pressure. Together, they point to a deeper erosion of financial resilience among millions of working people. For employers, the central question is no longer simply whether someone has a job. It is whether that job provides enough security for workers to pay their bills, absorb an ordinary financial shock and build some protection against the future.
As Armstrong puts it, employment should provide a genuine route out of hardship. For millions of low-paid workers, the latest figures suggest that promise is becoming increasingly difficult to realise.
Click here to read the full Life On Low Pay report.
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