Monitoring Poverty in Wales
Today marks the launch of Monitoring Poverty and Social Exclusion in Wales 2013 report, our biennial report for the Joseph Rowntree Foundation. Almost a quarter - 23% - of the population of Wales are in poverty after housing costs, giving it one of the highest rates of any country or region in the UK (only the West Midlands and London were higher in the three years to 2011-12, though several others had the same rate).
The main focus of the report is on the labour market: those who are in working families but still below the poverty line, and those who want work but are not actively looking for it or ready to start (those who are ‘far from the labour market’).
An important finding in the report is that the number of people (excluding pensioners) in working families in poverty now exceeds the number of people in non-working families in poverty. The report uses figures up to 2010-11, but more recent data has now become available. Between 2009-10 and 2011-12, there were 310,000 non-pensioners in working families in poverty, compared to 275,000 in non-working families This has been the case in the UK as a whole for a while (since the early 2000s). It is increasingly clear that any government’s commitment to beating poverty does not end with the signing of an employment contract.
The report examines in-work poverty in Wales in more detail. 29% of those in part-working families (those with one or more part-time earners, or one full-time earner and someone who does not work) are in the bottom fifth of the population by income, compared to 7% those in full-working families (all adults working full-time, or one full-time and one part-time). For many, working more hours is both what they want and a route out of poverty. However, a lot of those working part-time have barriers to doing more work, such as childcare or disability. And for those in full working families towards the bottom of the income distribution (the 74,000 in the bottom fifth), higher rates of pay need to be part of the answer.
When looking at adults by household income, the importance of rates of pay becomes more apparent. Adults paid above the living wage tend overwhelmingly not to be in the bottom fifth of the income distribution (only around 19,000 or 3% are in the bottom fifth). Low paid adults are fairly evenly distributed across the distribution. In other words, low pay does not guarantee poverty, but decent pay is associated with higher household incomes. This is almost certainly correlated with other things, such as having an earning partner or more hours. Low pay and insufficient hours often go hand in hand. Both need to be addressed to tackle poverty.
Amongst those not in work, UK government policy in terms of Employment and Support Allowance and changes to Income Support, is intended to move those far from the labour market from being ‘inactive’ (not actively seeking work) to active. In terms of out of work poverty, 47% are disabled and 19% were lone parents. This policy might be pushing at an open door in some respects, given that four in ten of those lacking but wanting work in Wales are disabled. Other research shows that Wales will be hardest hit in Great Britain by changes to disability and sickness benefits. But the real problem here is Wales’ low employment rate: with an ‘average’ employment rate, economic inactivity would be 45,000 lower.
Wales faces the next few years at a disadvantage. It has one of the lowest employment rates in the UK, and many of those who want work in Wales have disability which may act as a barrier into work. It will also be hit very hard by welfare reform. And whilst a positive solution can be identified – a buoyant full employment economy – the Welsh government needs to work with what it can. For the immediate future, that should mean working to mitigate poverty (such as ensuring the poorest areas don’t have the worst services), protecting people from welfare reform where possible (such as not changing council tax benefit), and advancing a low pay strategy in conjunction with schemes such as Jobs Growth Wales. Another suggestion may be to test public services against the needs of those in working poverty, who may be short of time as well as money. The nature of poverty in Wales is changing, and policy will need to change with it.