Can we end in-work poverty?

Poverty A man next to a machine
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ViewsOctober 3rd, 2016

With few signs of poverty in Wales falling, Victoria Winckler looks at an important new project to develop practical ways of cutting in-work poverty.

Successive politicians, from Tony Blair to David Cameron to Iain Duncan Smith have all said that “The best route out of poverty is work”.  Work certainly reduces the risk of having a poverty-level income – even a household where there’s only one person working part-time is three times less likely to be in poverty than a household where the adults are unemployed. But increasingly having a job doesn’t guarantee escaping poverty – the combination of low pay and part-time hours mean that more than half of people in poor working-age households live with at least one person who is employed. This so-called in-work poverty is not only with us today, it is set to rise.

Quite what to do about reducing in-work poverty is much less clear.

Wage top-ups, in the form of Tax Credits and Housing Benefit help.  But,  from the UK Government’s point of view they’re costly and from the low-paid worker’s point of view they’re complex and are widely under-claimed.  The National Living Wage was an important step forward for workers aged 25 and over, but unfortunately for some employees, their bosses have offset most if not all the gains by cutting back on overtime, paid breaks and even discounted meals. The voluntary Living Wage – at more than £1 an hour more – is an even bigger boost to low-paid workers’ pay packets but unfortunately is still more common in higher=paid sectors than in low-paid industries.

We need to look beyond pay and into what goes on the in the work place

A team of academics at Warwick and Coventry Universities and at the London School of Economics are looking in depth at what could be done to reduce in-work poverty. More specifically, they’re looking at whether the economic sectors that are forecast to grow in the next ten years could be harnessed in some way to bring down the headline rates of low income.

This is really important because some of the sectors that are forecast to create the largest numbers of new jobs in Wales are sectors where there are very high levels of low pay – such as food and accommodation, retail and social care. Even worse, not only do these sectors have widespread low pay, workers in them are much less likely to move out of a low-paid job that workers in low-paid jobs in sectors like financial services.  There’s something about low pay in some sectors that is proving really difficult to shake off – a sticky floor.

This matters for individuals, and it matters for reducing poverty

Individuals who move into employment in some sectors essentially swap in-work poverty for out-of-work poverty. On top of this, areas of Wales that are likely to see these low-paid sectors grow rapidly in the coming years – which includes our major cities – could well see an increase in employment and an increase in poverty at the same time. So finding some solutions is vitally important.

Find out more

In the next few months, the Bevan Foundation is working with the academic team to increase awareness of the issues, encourage discussion and possible solutions and generate interest in taking some of them up.  We’ve published three briefings on:

  • the project itself
  • poverty in Wales especially in-work poverty
  • an overview of sectors forecast to grow.

We’re also organising a series of ‘workshops’ – in Wrexham, Swansea and Cardiff – where we’re inviting employers, employees and skills providers to work with the research team towards practical solutions – please let us know if you’d like to attend.

To find out more visit the project page and sign-up to our free newsletter to keep up to date.

Victoria Winckler is Director of the Bevan Foundation

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