Rise in ‘working poor’
by Peter Wozniak
A dramatic increase in unemployed poverty has been spared at the cost of a rise in the number of “working poor”, the IPPR thinktank has suggested.
A report published today presents complications for the government’s employment strategy, as the main focus thus far has been on getting more people into work rather than on tackling poverty among those in employment.
Nick Pearce, director of the left-of-centre thinktank, argued that the focus must shift to improving prospects for those who are employed but suffering from poverty due to low pay.
“While unemployment increased by less than expected in the recession, these figures clearly show that being in work is no guarantee of being out of poverty,” he said.
“When employment starts to recover, it is vital we learn two fundamental lessons. First, we must tackle the cause of low pay and low productivity in the ‘pedestrian’ sectors of our economy.
“Second, we need to make it easier for more families to have two earners – by, for example, improving childcare and work incentives. That will help lift children out of poverty and reduce inequality.”
The report highlights the fact that of the children currently living in poverty, 1.7 million live in working households, compared to 1.1 million in unemployed households, with the former figure on the rise.
The thinktank stated that “poverty is not simply the result of worklessness”.
The impact of the recession hits those in work highest, as employees accept pay-freezes and cuts in order to avoid mass redundancies, it argued.
The report added: “A key feature of the 2008/09 economic recession has been the much lower-than-predicted rise in joblessness.
“The downside has been lower earnings for many people in work, contributing to higher levels of in-work poverty.”
The IPPR did however praise work and pensions secretary Iain Duncan Smith’s attempts to get more people into work, but insisted more had to be done to ensure those on low pay are lifted out of poverty.
The coalition’s proposals include plans to raise the initial threshold of income tax to £7,475, but the net improvement in income for low-paid workers is likely to be mitigated by cuts in welfare spending.
