Lone parents working under 16 hours a week ('mini-jobs')

This report examines whether encouraging lone parents to work in jobs of less than 16 hours a week ('mini-jobs') could increase the employment rate of lone parents, tackle the high rates of poverty among this group, and allow lone parents to make choices about how to combine work and family life on a more similar basis to mothers in couples.

Key points

• Around 2.5 million people have a mini-job where they work less than 16 hours a week. But the financial incentives for lone parents to work in mini-jobs are weak, and they are less likely to work in mini-jobs than mothers in couples.
• Increasing the amount that lone parents can earn before benefits are withdrawn (the earnings disregard) in means-tested benefits would be an effective way to encourage lone parents to work in mini-jobs.
• Provided that take-up of Housing Benefit and Council Tax Benefit improved among working lone parents, an earnings disregard set so that 16 hours' work a week at minimum wage led to no reduction in means-tested benefits could cost the Government £790m a year, and increase lone parents' employment rate by 5.4 percentage points. This would equate to a cost per job far lower than that for Working Families' Tax Credit.
• This reform would encourage almost all lone parents to do mini-jobs, and lone parents on Housing Benefit and Council Tax Benefit to work in jobs of longer hours. It would particularly benefit lone parents with the weakest incentives to work, and those on the lowest incomes.
• If the Government were worried that this policy would encourage lone parents to work fewer hours, or trap lone parents in mini-jobs, then a time limit – of say 12 months – could be placed on these higher disregards.

Background

The Government has targets to increase the proportion of lone parents in work to 70 per cent by 2010 and to have halved child poverty by the same date. Increasing the lone parent employment rate is central to its child poverty strategy. Partly through strengthened incentives to work in jobs of 16 or more hours a week, the lone parent employment rate has risen by over 10 percentage points over the past ten years, and now stands at 56.6 per cent. However, the incentives to work in jobs of less than 16 hours a week ('mini-jobs') have hardly changed and remain very weak. Around 2.5 million people have a mini-job. The proportion of lone parents working in such jobs has remained relatively stable over the past decade, and far fewer lone parents work in mini-jobs than do mothers in couples.

This study examined the potential of encouraging lone parents to work in mini-jobs, in order to increase their employment rate, tackle the high rates of relative poverty among this group, and allow lone parents to choose how to combine work and family life on a more similar basis to mothers in couples.