Improving jobs for a real route out of poverty

17th Oct 2013

Providing better jobs is the best way to help working families out of poverty, says Helen Barnard.

Today’s report from the Social Mobility and Child Poverty Commission is a welcome example of evidence shaping policy. It’s a rich report covering many areas, but three striking conclusions are:  

  • Pensioners need to play a bigger role in fiscal consolidation; working-age families cannot keep paying such a high price.
  • Employers and government must do more to lift wages, so taxpayers do not keep subsidising low wages.  
  • The next child poverty strategy should put in-work poverty at its centre. A big part of this is tackling the cost of childcare. The report suggests the 2013 budget includes funding for 85 per cent of childcare costs to be met for families claiming Universal Credit.

We argue for all three points.

In 2010, we highlighted the penalising of childless working-age adults, showing how far benefit levels had slipped behind earnings. Our Minimum Income Standard for the UK in 2010 showed Income Support or Jobseeker’s Allowance provided only around two-fifths of the necessary budget for childless adults, compared to up to two-thirds for families. Pensioner couples could achieve their whole minimum budget if they claimed all they were entitled to. Pensioners remain largely protected from benefit cuts, while many families with children and childless working adults have experienced significant reductions in income.

Much of our work has focused on the growing problem of in-work poverty. Low pay is a big factor, and we support the living wage. But pay is not the only factor. Our work on the future of the UK labour market shows a major problem is the broader nature of jobs on offer, particularly the disconnect between the ‘core’ market of secure, well-paid jobs and the ‘peripheral’ market of insecure, low-paid ones.

Skills are important in this:

  • Low-paid workers are less likely to receive training.
  • Too many employers do not use skills their workers have, or develop business models to use existing skills.

Our recent report on workplace cultures showed employers need to take a strategic approach to career progression among low-paid workers. Examples include changing managers’ performance objectives to include developing low-paid staff; building opportunities for work shadowing, mentoring and training; and creating career ladders that show what is needed for progression. We also need better part-time and flexible jobs.

Childcare is also crucial. Our recent response to the Treasury’s childcare consultation highlighted the importance of affordable childcare. Forthcoming JRF research shows most families with children living in poverty are either couples with one breadwinner, or single parents who are unemployed or working part-time. Reducing childcare costs would enable more second earners and lone parents work. Currently, £750million of proposed new funding will be used for tax-free childcare vouchers, mainly benefiting better-off families. Only £200million will support poorer families through Universal Credit.

Targeting more childcare funding towards low-income families would improve their opportunities and incentives. Improving the types of jobs offered would make work a real route out of poverty.