Work is not enough in the Scottish poverty debate
Today we launch our third and final briefing on Scotland’s poverty challenges for the Joseph Rowntree Foundation. The series aims to promote the needs of the poorest people on the agenda for Scotland’s future. This briefing focuses on work and poverty. Although sustained growth in employment could bring about large falls in poverty, this on its own is far from enough. A higher employment rate would need changes to how public services are delivered for those in work.
The employment rate in Scotland rose over the ten years to 2003 from around 67% to 72%. In 2008, it reached 74%, overtaking the UK as a whole. During the recession, Scotland faced a sharp decline in the employment rate (3.4 percentage points to 2010) but has since mostly recovered, being only 0.4 percentage points below its peak in the first quarter of 2014. The drop in Scotland was steeper than the UK as a whole.
The fall and the recovery that followed have been uneven. Younger age groups and those without university degrees have seen larger falls in the employment rate than others. Jobs growth has been mainly in higher and lower paying sectors; middle paying sectors, like construction and manufacturing, are still sharply down.
So how far can jobs growth reduce poverty? In the report, we look at the possible impact of Scotland achieving an 80% employment rate. With the current working-age population, that would mean an extra 300,000 jobs. The report considers two scenarios: one in which this is met through a growth in part-time jobs; and a second in which most of the jobs are full-time. Our analysis – which is not a forecast – assumes that the poverty rates by family work status remain the same. What varies between the scenarios is the number of people by work status.
The overall poverty rate for working-age adults and children between 2009-10 and 2011-12 was 19.4%, with an employment rate of 71%. If Scotland reached 80% through part-time jobs (taken up by those currently workless), the number of people in poverty would fall by 130,000, representing a 3.2 percentage point fall in the poverty rate. If instead the 80% employment rate was achieved through giving workless singles a full-time job and workless couples a full-time and a part-time job, the reduction in poverty would be around 200,000 people, down 4.8 percentage points.
An 80% employment rate, something which Scotland has never achieved, would be a substantial step. On pre-recession trends, it is a level that would be achieved by the mid-2020s. Yet it would still leave one in seven children and working-age adults in Scotland in poverty. Two thirds of them would be in working families.
This presents a double challenge. First, independent or not, Scotland needs lower housing costs, higher rates of pay and a tax and benefit system that leaves low paid workers taking home a larger share of any increased earnings. Only if these things happen will the in-work poverty rates themselves be lowered, making a better truth out of the maxim that work is the route out of poverty.
Second, those who remain in poverty even as they are working may well be as short of time as they are of money. Services need to adapt – perhaps even change radically – if people are to cope with the pressures. There are immediate obstacles – for instance, many of those currently out of work in Scotland will have childcare or other caring responsibilities. But another part of the problem depends on the shape of the labour market. As noted above, the labour market in Scotland is seeing growth in the highest and lowest paying sectors, with a hollowing middle. If growth at the bottom is in employment that is routine and inflexible, then people may have problems accessing, for example, GP clinics or council services. There are also perennial concerns around how transport works for the poor, a problem which becomes more acute when it is needed for employment.
Some say the needs of low income working households are usually no different from others in work more widely. Apart from the shortage of money – hardly a small consideration – we agree. But turn that on its head: if services are designed to meet the needs of low income working families then they will likely meet the needs of most. That’s a politically appealing reason for championing their interests.