Only one in four workers in the UK have successfully managed to escape low-paid employment in the last decade, a new report reveals.
The report – Escape Plan – written by the Resolution Foundation for the Social Mobility and Child Poverty Commission, found that only 25% of low-paid workers were able to permanently escape the low-pay poverty trap over the course of an entire decade.
The majority of workers were hit by an unenviable case of one-step forward and two-steps back, falling back into low-paid employment whenever they managed to escape.
12% were permanently stuck in dead-end low-paid jobs for each and every year over the last decade, forced to survive on low wages with limited opportunity for progression.
Workers who were able to escape the low-pay poverty trap saw their wages grow by an average of 7.5% in real terms over the decade, while those who were unable to escape low paid work saw their wages grow half as fast (3.6%).
The Resolution Foundation used official data to track workers over a decade to find out how far up the employment ladder they were able to progress. The independent think tank also investigated what factors may have played a part in pay progression.
Several factors were identified as being positively associated with escaping low paid employment, such as a higher level of education and a ‘positive outlook’. Businesses who assist with career development and offer greater opportunities for progression into higher-paid positions were are also a major factor, says the Resolution Foundation.
However, the report identifies a number of significant barriers to pay progression including disability, gender, part-time employment, being a single parent or an older worker.
The strong link between part-time employment and poor pay progression will be particularly disconcerting for the 6.8 million people currently working part-time in the UK – three-quarters of whom are women.
Part-time workers are offered fewer opportunities to progress within a company to higher-paid positions than full-time workers, say the Resolution Foundation. The hospitality industry such as restaurants and take-aways were found to have particularly poor escape rates.
Vidhya Alakeson, Deputy Chief Executive at the Resolution Foundation, said:
“Britain has a long-standing low pay problem, with over a fifth of the workforce in poorly paid jobs. But the limited opportunities for escaping low pay is just as big a concern as it has huge consequences for people’s life chances.
“While relatively few workers are permanently trapped in low pay, just one in four are able to completely escape. More permanent escape routes are needed for the huge number of workers who move onto higher wages but fail to stay at that level.
“Some groups clearly find it more of a challenge than others to rise up the pay ladder. Breaking down the barriers to promotion faced by disabled people, single parents, part-time and older workers is crucial to reducing the share of low pay across the workforce.
“We know that even in sectors dominated by low pay it is possible for staff, assisted by employers, to progress their career and earn more. But for this to happen we need more employers to take the issue seriously and have effective plans to promote pay progression.”
The Rt Hon Alan Milburn, Chair of the Social Mobility and Child Poverty Commission, added:
“The majority of Britain’s poorest paid workers never escape the low pay trap. Too many simply cycle in and out of low paying jobs instead of being able to move up the pay ladder.
Any sort of work is better than no work but being in a job does not guarantee a route out of poverty.
> There speaks someone who has never had to do “any sort of work”…
“This research provides compelling evidence for employers and government to do more on pay progression. It is a powerful argument for Britain to become a Living Wage country.”
Source – Welfare Weekly, 11 Nov 2014
A low pay epidemic is sweeping the North East, it is claimed, as new figures reveal one in four are paid below a living wage.
A report released today by KPMG estimates that well over a quarter of a million workers receive less than the £7.65 per hour experts say is needed for the basic cost of living in 2014.
The TUC claim that some businesses can afford to pay the living wage, calculated by Centre for Research in Social Policy, but are refusing to do so – and the regional economy is suffering as a result.
The North East Chamber of Commerce, however, says there has been progress and last week published a survey which shows 35% of firms increased workers’ pay above inflation last year.
Northern TUC Regional Secretary Beth Farhat called for a bigger commitment. She said:
“People deserve a fair day’s pay for an honest day’s work.
“But low pay is blighting the lives of hundreds of thousands of families in the North East. And it’s adding to the deficit because it means more spent on tax credits and less collected in tax.
“We have the wrong kind of recovery with the wrong kind of jobs – we need to create far more living wage jobs, with decent hours and permanent contracts.
“The fact is there are employers out there in our region who can afford to pay living wages, but aren’t.
“It is now time for all responsible employers to commit to adopting this standard, which enables workers to earn just enough to be able to live a decent life.”
Catherine McKinnell, Labour MP for Newcastle North, will speak at the Living Wage Summit at Newcastle’s Centre for Life on Thursday as part of a week of action on low wages by the TUC.
Newcastle City Council became the first to introduce a living wage and the authority boosted this to £7.55 in April, and South Tyneside has announced it is to follow suit. Councils in Gateshead, Northumberland and North Tyneside all set up working groups to explore the issue earlier this year.
Ms McKinnell, Labour’s Shadow Economic Secretary, said:
“People in the North East are really struggling with the cost of living crisis and with around one in four workers in our region paid less than the living wage, more must be done to tackle the problem of low pay.
“Finding ways to support and encourage employers to pay the Living Wage is a major part of that.
“It is fantastic to see more businesses and Labour-run councils in our region seeing the benefits of adopting the Living Wage, but it is important that we continue to demonstrate the value, both to employers but also to our region as a whole.”
The Living Wage Summit will also hear from local authorities, trade unions, voluntary and community agencies, such as the Child Poverty Commission and employers.
Speakers include James Ramsbotham, chief executive of the North East Chamber of Commerce, Sarah Vero from the Living Wage Foundation, Reverend Simon Mason and Matt Stripe, HR director for Nestle, who are a committed Living Wage employer.
Source – Newcastle Evening Chronicle, 03 Nov 2014
This article was written by Patrick Wintour, political editor, for The Guardian on Monday 20th October 2014
Britain is on the brink of becoming a nation permanently divided between rich and poor, according to the Social Mobility and Child Poverty Commission in its second annual state of the nation report.
The 335-page document is likely to be a reference point against which the government’s anti-poverty record will be judged, and to feature strongly in opposition party manifestos for the 2015 general election.
The report says all three main Westminster political parties are lamentably failing to be frank with the electorate about the fact there is no chance of meeting the government’s statutory child poverty target by 2020.
It also predicts that 2010-2020 will be the first decade since records began that saw a rise in absolute poverty – defined as a household in which income is below 60% of median earnings. A rise from 2.6 million households in absolute poverty to 3.5 million is now expected.
The chair of the commission, the former Labour cabinet minister Alan Milburn, said: “Muddling through will not do when the mismatch between needs and anti-poverty government policies are widening.”
Asked whether the government had responded to his first report, he said:
“It is like water from the stone. Our plea is not just to the current parties of government … They are great at talking the talk, the issue is whether they can walk the walk. The policies lack the scale to move the dial.”
Milburn attacked the government for failing to agree a child poverty strategy due to a coalition row.
“You cannot have a situation where government ministers first discredit a target and then fail to agree a new target and then go back to a discredited old target,” he said. “That is beyond a Whitehall farce.”
The report warns that “2020 could mark a watershed between an era in which for decades there have been rising living standards shared by all and a future era where rising living standards bypass the poorest in society.”
It suggests that the link between effort and reward, on which social mobility relies, has been broken by changes in the housing market – with home ownership rates halving among young people in 20 years – and the labour market – with 5 million workers trapped in low pay.
When combined with cuts in welfare and public spending, these changes put Britain on track to become a permanently divided nation.
The report calls on the next government to supplement the existing targets with new measures to give a more rounded picture of poverty and to amend the legislation to set out a new timescale for achieving them.
The commission made six major recommendations:
• The UK should commit to implementing a living wage by 2025 at the latest.
• The Office of Budget Responsibility should publish an assessment of each Budget for its impact on social mobility and child poverty.
• Half of all workplaces with more than 10 staff should offer quality apprenticeships.
• New forms of housing tenure through expanded shared ownership schemes and reform of the private rented sector.
• The best teachers should be paid more to teach in the worst schools to help end illiteracy and innumeracy in primary schools by 2025 and halve the attainment gap in secondary school by 2025. It suggests teachers should get a 25% pay rise to work in the most challenging schools.
• Unpaid internships to be made illegal and 5,000 more pupils from a free school meals background to be going to university by 2020. It proposes that the extra 100,000 university places by 2020 give universities a unique chance to find the extra 5,000 places, with the Russell group admitting 3,000 more places for state schools, using textual admission processes.
Milburn said internships had become a new rung on the professional ladder and were being abused by the middle classes and people from private educational backgrounds.
The report highlights that child poverty, set against the 2010 Child Poverty Act, was at a historic low in 2012-13.
But it adds:
“The bad news is that real wages are still falling while jobs are becoming less secure. Housing costs are straining the link between effort and reward that should be at the heart of a fair and socially mobile country and different parts of society are having different experiences of the recovery with big variations by income age family type and region.”
It also finds
“a higher proportion of jobs are insecure and low paid and 5 million people earn less than the living wage”.
Milburn also challenged Labour’s promise to commit to a minimum wage of £8 an hour by 2020, saying the number was less ambitious than what has been achieved in the current parliament. Labour said its policy was to raise the minimum wage to 58% of average earnings – higher than the current average.
The report also warns that money will not be available in the next parliament to drive an anti-poverty fight. Milburn said:
“The impact of welfare cuts and entrenched low pay and welfare cuts will bite between now and 2020. The pace of fiscal consolidation has been slower than anticipated, meaning over 40% has been deferred to the next parliament.
“Each of the main parties are committed to eye-wateringly tight spending cuts. None of them have made much effort to reconcile the social ends they say they want with the fiscal means to which they are committed.
“In particular plans, to cut in-work support in real terms in the next parliament can only make the working poor worse off, not better off.”
The report adds:
”The current proposal for tax-free childcare is complicated, with resources focused on those with the highest incomes – the wrong priority at a time austerity.
“In education the attainment gap remains unacceptably wide and static – almost two-thirds of children fail to achieve the basics of five GCSEs including English and maths. Poor children are less likely to be taught by good teachers.”
Source – Welfare Weekly, 24 Oct 2014