Insecurity: the missing piece of the productivity puzzle

For years, the UK's productivity debate has circled around a familiar set of problems: skills gaps, sluggish business investment, under-developed infrastructure, and a planning system that struggles to keep pace with growth ambitions. Our study at the Institute for Global Prosperity, University College London, argues that, instead, living with insecurity is a missing part of that puzzle. Precarious work, unstable housing, food and energy insecurity, unreliable transport and unaffordable childcare don't just make life harder for individuals – they measurably suppress the hours people work and the wages they earn, with knock-on effects for the wider economy. An ‘insecurity penalty' on a par with the gender pay gapThe research followed tens of thousands of people across the UK over seven years to understand how different forms of insecurity shape people's lives. What we found was striking. People experiencing multiple forms of insecurity earned roughly 25% less than those with stable housing, finances and good health. More importantly, this earnings gap widened over time, with the long-term penalty becoming comparable in scale to the gender pay gap.Lower-paid workers bear the brunt, and the effect compounds over time, roughly doubling after seven years of sustained insecurity. Crucially, these productivity costs persist even after stripping out income entirely – in other words, insecurities independently erode people's capacity to work, regardless of how much they earn.This tells us something important. Economic inactivity and low productivity are not simply the result of a lack of jobs or inadequate skills. They are often symptoms of wider challenges that prevent people from participating fully in the labour market. The ‘stacking' problemThe research finds that multiple insecurities ‘stack up': someone under financial stress is also more likely to face poor housing or health at the same time. Financial stress clouds decision-making, insecure housing disrupts routines, and health shocks reduce capacity to work – each intensifying the others. We believe this cognitive overload may help explain the UK's rise in economic inactivity, as people withdraw from the labour market under compounding pressure.The policy implication is clear: interventions aimed at a single insecurity – a housing benefit here, an employment scheme there – may ease immediate pressure but won't build the secure foundations people need to work productively.Why this matters for local and combined authoritiesThe specific mix of insecurities people face varies sharply by place – precarious retail work and unaffordable childcare in one town, fuel poverty and transport deserts in another, insecure renting and poor health in a third. A single national policy, designed once for the whole country, cannot easily respond to that variation. Local and combined authorities can: they hold the on-the-ground knowledge of which insecurities are stacking in their area, and, increasingly, the powers to act on several of them together.Incoming Prime Minister Andy Burnham has made 'place first, not party first' the organising principle of his agenda, promising the biggest transfer of power from Whitehall to local communities in a generation, with good-quality housing and "good growth in every postcode" at its core.Mayoral Combined Authorities now, or will soon, hold devolved powers spanning housing, transport, skills, employment support and energy, held together under a single, place-based strategy. A Combined Authority that designs its housing, transport and employment programmes around the specific insecurities affecting its residents is not only pursuing good social policy; by treating livelihood security as core economic infrastructure, it is, on this evidence, pursuing a productivity strategy that a uniform, national programme cannot replicate.This is a reversal of conventional thinking: not that growth alone raises living standards, but that secure livelihoods are themselves one of the conditions that make people, and places, productive in the first place. Professor Saffron Woodcraft is professorial research fellow at the Institute for Global Prosperity, University College London For more information the paper is available here

Title

INCLUSIVE GROWTH

Insecurity: the missing piece of the productivity puzzle

By Saffron Woodcraft | 09 July 2026

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