Low pay and short hours are putting working families in Wales at greater risk of poverty

10th Sep 2015

Working families and young people in Wales are at greater risk of poverty now than they were ten years ago, new research from the Joseph Rowntree Foundation (JRF) and New Policy Institute (NPI) has revealed.

The new report, Monitoring Poverty and Social Exclusion in Wales 2015 finds that 23 per cent of the Welsh population, 700,000 people, are living in poverty. This compares to 21% in the UK as a whole. The new analysis is the latest in a series of biannual state of the nation reports which show how people in Wales have been affected by the recession and economic recovery. This year’s report paints a picture of how Welsh household budgets have changed over the past ten years.

It finds that around 25% of jobs in Wales are low paid, a figure that rises to 45% for part time jobs. Over the last decade, the proportion of jobs in Wales that are low paid has been consistently higher than that UK average. Over the same period, the number of people in poverty who live in a working family has risen for all age groups. This is generally offset by a fall in poverty among those in workless families, with the exception of the 16-29 age group. 

The rise in poverty among those aged 16-29 was as great as the total rise for those aged 30-64. However, an overall fall the number of children living in poverty and a fall of 20,000 in the number of pensioners living in poverty has meant that the proportion of people living in poverty in Wales has remained the same over the last ten years.

The report finds that:

  • An average of 700,000 people were in poverty in Wales in the three years to 2013/14, equivalent to 23 per cent of the population.
  • In 2013, there were 22,000 more children in working families were living in poverty, but 40,000 fewer in workless families than in 2003.
  • 24,000 more young-people aged 16 to 29 in Wales live in poverty now than in 2003. This is roughly the same as the increase in the number of people aged 30-64 who are living in poverty.
  • Ten years ago, 41 per cent of people in poverty lived in the social rented sector, falling to 33 per cent today. For the private rented sector, it rose from 19 per cent to 28 per cent. 
  • Twenty‑seven per cent of people in a family with at least one disabled adult are in poverty, compared with 23 per cent overall. 
  • Young people are disproportionally likely to be referred for a benefit sanction. In 2014, 16 to 24‑year‑olds received 13,000 of the 30,000 sanctions, 44 per cent of the total. Overall, there were 30,000 JSA sanctions in Wales in 2014, down from 43,000 in 2013, mostly due to the smaller number of JSA claimants. 
  • Working patterns make a big difference to risk of poverty. Families with at least two workers, one of whom is full-time, have seen poverty rates remain steady over the last decade. However, there was a rise of 100,000 two parent families who work part-time, are self-employed or have one adult who do not work outside the home who live in poverty.
  • People who live in rural areas of Wales are likely to be disproportionately affected, as a higher proportion of residents are likely to rely on in-work benefits such as Tax Credits in order to make work pay.

Julia Unwin, Chief Executive of the Joseph Rowntree Foundation, said:

“Working families in Wales are being pushed into poverty by low pay and scarce hours.  Government action has helped to cut the number of pensioners and children living in poverty, but this is being balanced by a worrying rise in the number of working people who can’t make ends meet. The new National Living Wage will help some workers to find a way out of poverty, but for some wage rises will not come into effect before they lose tax credits To make work pay for everyone in Wales, we need more high-quality jobs which offer more hours and genuine career progression to help people move up and out of poverty.” 

Tom MacInnes, Research Director of the New Policy Institute, said:

 “Our report highlights the deteriorating position of younger adults, those aged between 16 and 29. This group has seen a rise in poverty both in and out of work. Younger adults are also at greater risk of having their benefits sanctioned and recent policy from Westminster, such as the restriction of housing benefit to under 21s, further worsen the prospects for this group. Against this backdrop, young adults need a specific policy focus from the Welsh government on jobs, skills and housing.”  

JRF believes that the new National Living Wage, unveiled in the Summer Budget, will help some people living in poverty to find a way out.  However, people under the age of 25, who have seen some of the sharpest rises in poverty over the past decade, will not benefit from the new, higher rate. Some households which will benefit from the NLW will see wage rises outstripped by welfare reform measures announced in the Budget. 

To make sure that all households are able to benefit from  the growing economy, JRF calls for an economic strategy in Wales which: 

  • Boosts productivity and creates high-quality jobs that offer progression, support for families to get back into work and the opportunity for young people to get their first step onto the career ladder
  • Encourages employers to pay the higher, voluntary living wage where possible
  • Makes sure there is a strong safety-net in place for people who genuinely need support 
  • Make the process of applying benefit sanctions more consistent so that those who are out of work know how and when a benefit sanction will be applied and how they can avoid breaking the rules