working poor – The NEN – North Edinburgh News

TUC: Only good, well-paid work is a route out of poverty

Work should be a route out of poverty. But, especially under this government, it isn’t (writes TUC’s ALEX COLLINSON).

This week, news came out that the Prime Minister hopes to “blunt calls for urgent action on the cost of living crisis by stressing that work is the best route out of poverty”.

It’s a popular line with this government. And it should be true – but sadly, it isn’t.

The majority of people in poverty (57 per cent, or 8.3 million people) live in a working household. That rises to 75 per cent of children in poverty.

The government’s record on this is atrocious. The number of people in in-work poverty has increased by 2 million since they came to power in 2010. It’s now at a record high, as is the number of children in poverty living in a house where at least one adult is in work.

If work is to be the best route out of poverty, the government must do more to get pay rising. In the meantime, it can’t use “work is the best route out of poverty” as a cop out for not properly addressing the cost of living crisis. We need proper action. Structural solutions – such as improved trade union rights, nationalisation of energy companies, and improvements to the benefits system – are needed alongside a windfall tax to fund urgent support to pay energy bills.

17-year pay squeeze

A key reason for the rise of in-work poverty is that work simply doesn’t pay enough. The government’s minimum wage, even the one it calls a living wage, isn’t a real living wage.

And we’re in the midst of a 17-year pay squeeze. Real pay is currently lower than it was in 2008, and the Office for Budget Responsibility forecasts that it won’t return to above 2008 levels until 2025. This 17-year pay squeeze is, by far, the longest in living memory.

The impact of this on workers’ pay packets has been massive. If real weekly wages had continued growing at the pre-2008 rate, they’d now be £111 per week higher than they are. By 2026, if forecasts are correct, this’ll be £164.

Impact of energy costs

It’s against this background that real pay is falling again. Inflation, at 9 per cent, is hitting wages hard. In March 2022, average weekly earnings fell by £16 per week (-2.7 per cent) compared to the same month a year ago. Public sector pay growth is the worst on record – falling by £30 per week (4.9 per cent) over the same period.

The news that the energy cap will rise by around £800 in October is incredibly worrying. If this does happen, it means that between December 2021 and December 2022, energy bills will have risen by a massive 119 per cent. In contrast, nominal wages will have risen by just 5.2 per cent. The standard benefits payment will have risen by just 3.1 per cent. This means that energy bills are set to grow 23 times faster than wages and 38 times faster than benefits this year.

Insecure work

On top of this, work is too often insecure. 3.6 million people are in insecure work, whether that’s zero-hours contracts, agency work, casual work, or low-paid self employment. The government has repeatedly broken its promise to introduce an employment bill that would tackle insecure work.

The benefits system

Pushing work as the route out of poverty is also often the government’s way of refusing to improve the welfare system. decent work and social security must go hand in hand, not be seen as alternatives.

Since it came to power, the government has repeatedly cut benefits payments in real terms. The real value of the standard benefits payment has fallen by £51 per month since 2010.

As set out above, in the face of massive rises in energy bills, the government has made real term cuts to benefits payments. When the price cap rises again in October, energy bills will be £1,523 per year higher than they were a year before. The standard benefits payment will only be £121 per year higher.

A common proposal around benefits is to bring forward the increase in benefits and pensions that would be expected in April 2023/24 to autumn of this year. For example, if inflation hit 10 per cent in September of this year (September is the reference month for benefit uprating), rather than waiting to increase benefits in April, they could be increased in October, and then maintained at that level from April onwards.

But this would increase benefits by around £7.70 a week, meaning it wouldn’t even go close to making up for cutting the £20 uplift.

Like the standard benefits payments, pensions also went up by just 3.1 per cent in April this year. Government made an active decision not to maintain the triple-lock – which would have seen pensions rise by around 8 per cent in line with the wage figures last autumn. This will cost pensioners almost £500 across the year.

Good, well-paid work is a route out of poverty

The current government has a proclivity towards badly funded temporary schemes and half-baked novelty ideas, which has again become clear during the current crisis. If it’s serious about tackling the cost of living crisis, we needed proper solutions to support people right now, alongside structural changes to fix these problems in the long term.

It’s not enough to just say that work is a route out of poverty. The reality is that too much work is low-paid and insecure. If government wants work to be a route out of poverty, it needs to ensure all work is well-paid and secure.

When it comes to pay, government should stop attacking trade unions, and instead improve trade union rights. Trade unions need stronger powers and better access to workplaces to drive up wages and conditions.

Fair pay deals need to be implemented in whole industries, negotiated with unions, and designed to get pay and productivity rising in every sector. We also need an emergency boost to the national minimum wage, as well as the long-awaited introduction of that employment bill they’ve been promising for ages to tackle insecure work.

To help people with energy costs, the government must recognise that energy is an essential public good that should come under public ownership, and implement an accelerated programme to insulate homes. To help people right now, we need a windfall tax to pay for additional grants to help with the costs of energy. With the energy cap rising by £1,523 in the space of just a year, this support will need to be substantial.

Government must also fix the benefits system. We want much more generous benefits payment (with the standard payment raised to £260 per week), alongside the scrapping of the cruel aspects of the system, such as the five-week wait, the benefits cap, the two-child limit and no recourse to public funds.

Work isn’t currently a route out of poverty, but it can be if government takes steps to ensure that all work is good, well-paid work.

One Scot in eleven now living in poverty

Having a job is no guarantee of escape from poverty – half of children living in extreme poverty were in households where at least one adult was in full time employment

More than half a million people in Scotland are living in severe or extreme poverty , according to the latest data published today. Scotland’s poorest people lived on less than half the average income in 2012/13, according to a new government report.

Around 510,000 people, including 100,000 children and 80,000 pensioners, are living in severe poverty – households with an income under £11,500. A further 230,000 were classed as living in extreme poverty, which means the household had an income of lower than £9200.

A household is defined as living in relative poverty with an income below 60 per cent of the UK median income. Severe poverty is defined as living with an income lower than £11,500, or 50 per cent of UK median income, while extreme poverty is defined as lower than £9,200, 40 per cent of UK median income.

The scale of the country’s poverty levels has been exposed in the Scottish Government’s Severe Poverty in Scotland report, which shows working age adults and children are more likely to live in severe poverty than pensioners, particularly after housing costs.

Commenting on Severe Poverty in Scotland, Social Justice Secretary Alex Neil said: “It’s a disgrace that so many people live in such severe or extreme poverty, but it’s an unfortunate and inevitable result of the UK Government’s failed austerity agenda and welfare cuts that are slashing incomes for some of our poorest households.

“With employment increasing and unemployment down, Scotland is outperforming the rest of the UK, yet the statistics show that a job is no longer any guarantee against severe or extreme poverty.

“That’s why we opposed cutting in-work tax credits and why the Scottish Government and its agencies are paying the living wage, encouraging other employers to follow suit.

“We have put tackling poverty and inequality at the heart of Government, through policies like the council tax freeze, free prescriptions, expanding childcare provision, while we are mitigating the worst of the welfare cuts, by replacing income lost through the bedroom tax or council tax benefits cuts.

“That action is making a real difference and we will continue to make the argument for a fairer welfare system.”

The statistics also make clear that being in a job is not a guarantee against poverty. Being in employment does significantly reduce the risk of poverty, but 44% of working age adults in extreme poverty lived in households where at least one adult was in employment, as did 60% of children – half of children living in extreme poverty were in households where at least one adult was in full time employment.

In 2012/13, around 10% of working age adults and 10% of children were living in severe poverty, as were 8% of pensioners.

After housing costs, 16% of working age adults, 15% of children and 6% of pensioners in Scotland are living in severe poverty.

Over the last decade, while the rate of relative poverty has fallen, a greater proportion of households in poverty were in severe or extreme low income in 2012/13.

In work and in poverty

Majority of children in poverty live in working households

More than half of children living in poverty in Scotland are growing up in households where at least one person is in employment – and that number is rising, according to new research published today.

Speaking in a debate in the Scottish Parliament later today, Cabinet Secretary for Fair Work, Skills and Training Roseanna Cunningham will argue that it is unacceptable that work is no longer the straight forward route out of poverty and will reiterate the Scottish Government’s pledge to tackle inequality and build a fairer Scotland.

The Cabinet Secretary is speaking as research published today shows that the proportion of those in in-work poverty is gradually increasing and that for many, moving into work doesn’t necessarily mean moving out of poverty.

Ms Cunningham said: “It cannot be right that the majority of working age adults in poverty in Scotland are in ‘in-work’ poverty. Well-rewarded and sustained employment is the best route out of poverty, for those who are able to work, and one of the best ways to tackle inequality.

“This is why we are prioritising the promotion of the living wage and working closely with the Poverty Alliance to encourage more employers to sign up to the Living Wage accreditation scheme. Business productivity goes hand in hand with fair and equal pay. We must all be fully committed to fair work.”

The Scottish Government is developing a Scottish Business pledge to invite companies to commit to extending the living wage, involve their local communities and invest in youth training and employment. In return businesses will be offered a package of tailored support on skills, innovation and exports to help them grow and prosper.

New research looking at in-work poverty summaries the evidence about the extent and impact of in-work poverty in Scotland. It identifies three key factors that influence in-work poverty – hourly rate of play; number of hours worked by members of the household; income gained and lost through the welfare and tax systems.

The main findings of the research include:

• The majority of working age adults in poverty, 52 per cent, are in in-work poverty and that number is increasing

• For children in poverty, 59 per cent are living in households with someone in employment which can have a profound and lasting impact on children’s outcomes

• In work poverty is costly to society via payment of tax credits and other in work benefits which top up low income

• Having one earner in the household means families may be more at risk of poverty at a time when the average living standard, and hence the relative poverty threshold, is increasingly determined by the living standard of double-earner households

• Low-wage work is a ‘dead end’ for many. Workers who are low paid at any one time are more likely to remain in low pay later in life.

You can view the Summary of Evidence Report at :http://www.scotland.gov.uk/Publications/2015/01/3233