In-work poverty is the most distinctive characteristic of poverty today. For the first time, it outstrips the levels of poverty in workless households.
Monitoring poverty and social exclusion, published today, points to the underlying structural problems of the jobs market behind this.
More than half of children and working-age adults in poverty now live in working households. This is hard to fathom. It’s a total of 6.1 million people, made up of 2 million children and 4.1 million working-age adults – a million more people than are in poverty in workless households.
It’s a common misconception that people in poverty in Britain are out of work, receiving benefits and badly educated – and a fair number are. However, what this report shows is that anyone is at risk. People in Britain are in a constant cycle, in and out of work, and millions have been in and out of poverty since the economic downturn. Five million people have claimed Jobseeker’s Allowance (JSA) at least once in the last two years.
I was listening to a lecture last week by Jil Matheson, our National Statistician, who was explaining the direct relationship between GDP and unemployment. She explained that as the economy shrinks, unemployment rises. But this time, unemployment has not risen anything like as much as was expected from previous recessions. This is directly related to in-work poverty outstripping workless poverty.
And on top of this, hidden in the employment figures are 1.4 million people who are working part-time but wanting to work full-time. These are people who have had their hours cut due to the downturn or who have been unable to find full-time work. The figure is shocking and is at its highest level in 20 years.
There are more people in work now, but the jobs that they have gone into are more likely to be low quality (poorly paid, insecure) and/or part time, which makes it more likely that they will still be in poverty. Those lucky enough to be in work are facing a cycle of insecure, short-term and poorly-paid jobs, 4.4 million of which pay less than £7 an hour.
All grim news, but what can be done? While Universal Credit, the sweeping welfare reforms that will simplify six benefits into one, is welcome but it won’t solve the poverty problem on its own. We need a comprehensive poverty strategy, but the primary focus in the meantime has to be fixing the jobs market, as our research shows one in four families will be in poverty by 2020 as the labour market hollows out.
The six million people in poverty in working households show that at the moment, work is not the route out of poverty – so something needs to be done to ensure that it is.
Not only is low pay a poverty trap, it is a drag on economic recovery, and we’ll see what the Autumn Statement has to say to address both these very important issues. Millions of jobs are needed, and the focus must be on making sure that jobs are secure and better paid.
Only then can we start to overcome the grinding hardship that poverty has on millions of ordinary working people every day.