With in-work poverty now outstripping out-of-work poverty, what role does part-time work play in the labour market?
Today's ONS report shows that underemployment – people who lack the amount of paid work that they want – affects 10.5 per cent of the workforce. JRF’s Monitoring Poverty report earlier this week demonstrated that in-work poverty now outstrips out-of-work poverty, with underemployment a key part of the problem.
Two contradictory statements are often made about the relationship between part time working and poverty:
- More part-time work helps tackle family poverty because it enables people with caring responsibilities, most often women, to balance caring and earning.
- More part-time work increases poverty because jobs don’t pay enough to move people out of poverty and many people want full-time jobs but can’t get them.
So 'hurray!' for flexible working and 'boo!' to underemployment.
There are several core problems underlying this rather confusing set of messages.
First, the quality of part-time work makes a big difference. Much of the part-time jobs market is poor quality, leading people who need part-time hours (mostly mothers) to take work they are over-qualified for.
This is bad – and often frustrating – for them as it means that they are not earning as much as they could be. It is also bad for the less qualified people who they are displacing from those jobs and who are pushed even further down the employment (or unemployment) ladder.
We published a report earlier this year which highlighted the potential business benefits of creating part-time and flexible jobs and the need to encourage higher-quality part-time jobs to be advertised.
Second, the amount of income and work in a household is what is important for tackling poverty. Most families need at least one-and-a-half workers to be out of poverty.
Families with only one earner or who are wholly dependent on part-time work are therefore going to struggle to earn their way to a better standard of living. Lone-parent families can only have at the most one full-time earner and may need to work part-time to allow them to care for children (even of school age, given the lack of before- and after-school childcare in many places and the importance of parental input). In couples, helping potential second earners to work where possible is vital.
One of the concerns about the design of Universal Credit is that it weakens the incentives to work for many second earners, and neither it nor the Work Programme pays any attention to helping people to progress in work.
Third, the amount and nature of part-time work is part of a wider set of problems in the labour market. Work is proving an unreliable route out of poverty in part because so much of it is of poor quality. People become trapped in work which is insecure and poorly paid. The old idea of these kinds of jobs being stepping stones to better work, prominent in some of the discussion around the Work Programme’s results, is now a fallacy in many cases. People do not climb a ladder, they’re stuck on a roundabout.
Our research shows that the future development of the labour market is going to make this situation worse. Alongside changes to the benefits and tax systems, this will increase poverty in 2020.
Tackling in-work poverty needs to be the top priority for those across the political spectrum. To achieve this, we first need to create many more and better jobs than are currently projected. Second we need to find ways to target employment and skills interventions to households in poverty, not just those on low pay or with low skills.