WIREDGOV

In-work poverty in the recession, a briefing paper by the Institute for Public Policy Research (ippr), reveals that in 2008/09 there were 1.7 million poor children living in working households, compared to 1.1 million in workless households. The proportion of poor children who live in working households has continued to rise despite the recession driving up unemployment. Over 60 per cent of poor children now live with parents who work, demonstrating that poverty is not simply the result of worklessness.

ippr’s analysis also shows that the number of working-age adults who are “working poor” rose during 2008/09 by 200,000 to 3.4 million. There was no change in the number of out-of-work adults living in poverty during the same period.

A key feature of the 2008/09 economic recession has been the much lower-than-predicted rise in joblessness. Employers, staff and unions opted for pay freezes, reduced hours and voluntary redundancies rather than compulsory mass lay-offs.

But the downside has been lower earnings for many people in work, contributing to higher levels of in-work poverty. The government’s welfare reform plans rightly stress that work is the best route out of poverty. But without more action to tackle low pay,
improve job quality and help parents progress in work, it will be difficult to make progress on reducing child poverty.

ippr’s key findings include:

• In 2008/09, there were 1.7 million poor children living in working households,compared to 1.1 million in workless households.
• The number of poor children in workless households fell by 100,000 in 2008/09 compared to the previous year but there was no change in the number of poor children in working households.
• 60 per cent of working poor families have children, and over 80 per cent of working poor families with children are couple families (rather than lone parents).
• Half of working couples where neither partner is working full-time are living in poverty, as are one-fifth of lone parents working part-time.
• Over 45 per cent of Pakistani or Bangladeshi families in work are living in poverty.

Nick Pearce, Director of ippr, said:

“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.

“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.”

Notes to editors

• Households and families are defined as poor if their income is less than 60 per cent of median income.
• ippr’s analysis uses data from the Households Below Average Income 2008/09 dataset.
• Since 1998/99, the number of poor children in workless households has fallen by 700,000; over the same period, the number of poor children in working households has risen by 100,000.
• Since 2000/01, the number of poor working-age adults in working households has increased by 800,000; over the same period, the number of working-age adults in workless households increased by just 100,000.

Contacts

Tim Finch, Director of Strategic Communications, ippr: 020 7470 6106 / 07595 920899 / t.finch@ippr.org

Nyta Mann, Media Manager, ippr: 020 7470 6112 / 07979 605065 / n.mann@ippr.org