What impact does the rising employment rate have on poverty?

14th May 2015

Labour Market Statistics released yesterday show employment is at its highest since records began, and unemployment is decreasing rapidly, says Catherine Davie. But what impact does this have on poverty?

While in-work poverty is a growing concern in the UK, we mustn’t forget that for those who are workless, gaining a job can make a huge difference in the fight against poverty. Research released by the Office for National Statistics looking at poverty and employment transitions found that between 2007 and 2012, 70 per cent of people aged 18 to 59 moved out of poverty when they got a job. I’ve done some similar analysis using Understanding Society and the story appears to be the same, with 71 per cent of those who got a job between 2010 and 2012 getting out of poverty.

Getting a job can therefore be seen as a way out of poverty. But digging deeper into Understanding Society tells us that different types of jobs can make this more or less likely. Getting a full-time job is unsurprisingly much more likely to move someone out of poverty than getting a part-time job. Similarly, high-skilled jobs such as professional, managerial or technical occupations are more likely to pull someone out of poverty than lower-skilled jobs, with over 90 per cent of people in poverty getting out after securing these high-skilled occupations.

However, while getting a high-skilled job is shown to improve the chances of people moving out of poverty, the number of people in poverty who are able to secure these high-skilled occupations is low. People in poverty and without a job are more likely to get low-paid jobs, with 71 per cent of people in poverty entering either a partly-skilled, skilled non-manual or skilled manual occupation. Sales assistants and retail cashiers and healthcare and related personal services, both of which tend to offer lower salaries, are also shown to be two of the most frequently gained job types.

Although low-skilled jobs are not as successful as high-skilled jobs at getting people out of poverty, they do still help to reduce it. Over 83 per cent of people who got a full-time job in a partly-skilled occupation moved out of poverty, and two-thirds of people getting a skilled, non-manual job, which was least effective at getting people out of poverty, moved out of poverty. Furthermore, nearly three quarters of people who got a job as a sales assistant or retail cashier got out of poverty, while similar jobs demonstrated similarly high rates of escape (see chart).

Getting a job is therefore a positive step towards moving out of poverty. But despite this, half of all people in poverty live in a working family. Poverty is a hugely complex issue, and although employment status is important, other factors such as low wages, insecure jobs, zero hour contracts, and cuts to benefits can have a significant influence on whether or not someone is in poverty. This is why we need a comprehensive anti-poverty strategy that takes all these factors into consideration.