Is more work the solution to in-work poverty?

14th Jun 2013

New figures confirm the centrality of in-work poverty to tackling low incomes in recent years.

New figures confirm the centrality of in-work poverty to tackling low incomes in recent years. By 2011, 6.1m people experiencing poverty lived in households where at least one person was working; only 5.1m lived in workless households.

Creating more jobs and encouraging more people into them, particularly in one-earner couples, is vital. But for many in poverty the solution is better work, not just more work. We need to:

  • Improve progression routes for low-paid workers in sectors such as hotels and catering, retail, care and wholesale and transport;
  • Increase skills and training, currently much less available to low-paid workers;
  • Address informal workplace cultures that prevent progression, particularly for low-paid ethnic minority workers; and
  • Encourage business models that value higher skills and productivity.

The causes of in-work poverty are mixed; amount of work in a household; types of jobs, withdrawal of tax credits and benefits; costs of living. A key question for tackling this it is how far we simply need to get people to work more and how far they need to have better jobs (better paid, more secure, enabling progression). The extension of benefit conditionality to those in work means that Jobcentre Plus and Work programme advisers will have to start making this kind of judgement on a daily basis.

This will require a much better understanding of who exactly is in working poverty and what it is reasonable to expect from them. The New Policy Institute has done some initial analysis (available on request), which has highlighted some important distinctions.

First, 14% of the total number of people in in-work poverty live in households where all of the adults are in full-time work. For these households, the only way to move out of poverty would be to improve their pay.

Second, we need to take a long hard look at self-employment. Almost a quarter of people in in-work poverty live in households where at least one person is self-employed. 28% of poor working couples with children and 32% of couples without children live in households where at least one of them is self-employed. Self-employment can be seen as a way around poor quality, inflexible jobs and discrimination, particularly for women with children and people from ethnic minority backgrounds. However, it may simply lead many into further poverty.

One-earner couple families make up 25% of adults and children in in-work poverty; the majority have children but a sizeable minority do not. For these households, the most obvious route out of poverty is for the non-working partner to get a job. However, this depends on childcare, other caring responsibilities, availability of work (particularly part-time jobs), qualifications and health.

Part-time work is also a key factor. 26% of those in in-work poverty are in a household where all the adults work part time. A further 9% have one full-time and one part-time worker. Some of these people work part time because they are balancing caring responsibilities. For these people, increasing pay is probably more realistic than increasing hours. So improving the quality of part-time jobs is crucial. Others could work full time, but often cannot find the jobs to do so: 1.4 million part-time workers already want full-time work – the highest figure in 20 years.

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