The Liquidity Trap: Financial experience and inclusion in the liquid workforce


The Liquidity Trap: Financial experience and inclusion in the liquid workforce, is a new report from Demos looking at financial security for the modern, liquid workforce.

The report found that ‘liquid’ workers, such as gig economy workers and the self-employed face greater barriers to financial inclusion compared to traditional workers. They are less likely to hold financial products and are almost twice as likely (28%) to be turned down for financial products due to their employment history than traditional employees (15%). 

The research also revealed that:

  • There is serious concern among workers on zero-hour contracts – they are more than twice as likely (31%) to feel very stressed and anxious about their finances than employees (15%) in the last year
  • The ‘liquid workforce’ are over three times more likely to earn very low incomes than traditional workers, with 22% of liquid workers earning less than £10,000 per year compared to just 7% of employees. However, they are also slightly more likely to fall in a number of higher income brackets
  • Liquid workers are nearly twice as likely (28%) to turn to a payday lender to meet credit needs than employees (16%)
  • Whilst valuing flexibility, almost half of liquid workers (48%) would be willing to sacrifice some flexibility in the way they work for greater financial security – particularly those at the lower end of the income spectrum – whilst 21% of liquid workers would be unwilling to do so

The report calls for a package of solutions to improve financial security for the liquid workforce, including: a minimum wage, better financial services for people on flexible incomes, a more inclusive welfare system, measures to radically boost pensions take-up, and more support with financial management.

The report’s further recommendations include: 

  • An auto-enrolment pension scheme for the solo self-employed with the government acting as their ‘de facto’ employer
  • The government working with organisations, such as trade unions and banks, to establish universal portable benefit schemes for liquid workers
  • A means-tested ‘accountancy aid’ to help liquid workers manage their finances.

Commenting on the report’s findings, Ben Glover, Senior Researcher at Demos and Liquidity Trap co-author said:

“Self-employed workers are not protected by the safety net that many of us take for granted, from sick pay to maternity cover. This bargain is only fair if self-employed people earn enough to cover the additional risk they take on, but too often in Britain today this is simply not happening. That’s why we are calling for a new, higher minimum wage for the self-employed.”

Read the report here.