Low pay or no pay jobs market traps millions in poverty

By agency reporter
28 Nov 2012

The extent of in-work poverty in Britain has been graphically exposed in a new Joseph Rowntree Foundation report published this week, which highlights the insecurity faced by millions of working people.

The annual Monitoring Poverty report, written by the New Policy Institute (NPI), highlights the dynamic nature of poverty, caused in the main by people moving in and out of jobs, and an underemployed workforce.

The report shows the close links between the two, and found:

* 6.1 million people are in working households in poverty. Excluding pensioners, this is higher than the 5.1 million people in workless households in poverty.
* Underemployment, the number of people lacking the paid work they want, stands at 6.5 million. The number working part-time but wanting full-time work is now 1.4 million, up by 500,000 since 2009. A willingness among workers to do fewer hours is keeping unemployment in check.
* The number of working families receiving working tax credits - payments to top up wages – has risen by 50 per cent since 2003, to 3.3 million in 2012.
* 4.4 million jobs pay less than £7 per hour. Low paid work is common among hotels and restaurants, IT, finance and services, and wholesale, retail and transport jobs.

But people move in and out of work, and in and out of poverty, as the findings show:

* Almost 5 million people have claimed jobseeker’s allowance (JSA) at least once in the last two years, around one in six of economically active people.
* The turnover of people moving on and off JSA is substantial: 42 per cent of claims were made within six months of the last claim. Half stop claiming within three months.
* While 18 per cent of people are in low income at any one time, 33 per cent experienced at least one period of low income in a four year period, and 11 per cent are in low income for more than half of that time.

At the same time, changes to the benefit system will result in lower incomes for some of the most vulnerable people in society. The report shows how large numbers of families are to be hit by a combination of different cuts. These overlapping effects are something to which government has paid little attention.

Julia Unwin, Chief Executive of JRF, commented: "The most distinctive characteristic of poverty today is the very high number of working people who are also poor. Many more people have experienced poverty since the downturn, cycling in and out of insecure, short-term and poorly paid jobs. Tackling poverty requires a comprehensive strategy, but overcoming the frail jobs market must be the starting point."

Peter Kenway, Director of NPI, added: "This year's report challenges the myths surrounding poverty. Changes across five decades demonstrate poverty is not inevitable – reductions in child and pensioner poverty show that. The much cited 'never-worked' households actually only make up a very small part of the total number of workless households. The high level of in-work poverty undermines any idea that better incentives to enter work, the centrepiece of Universal Credit, is some kind of cure-all."

* The full Annual Monitoring Report can be read here: http://www.jrf.org.uk/publications/monitoring-poverty-2012

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