National Gallery staff protest at "poverty pay" for shift workers at a new exhibition of Van Gogh's 'Sunflowers'. Photograph: Getty Images.
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The UK needs better jobs not just more jobs

There are more working than non-working households in poverty for the first time ever. But don't assume a living wage will solve all problems.

It is often assumed that a rising tide will lift all boats and, as the economy grows, some of the benefits will trickle down, hopefully reducing poverty as they go. But JRF research shows that if the recovery is not rich in jobs, the impact on poverty will be muted. And as the CIPID this week warned, ahead of the monthly unemployment figures, jobs growth could yet slow. In addition, not only does the UK need more jobs, it needs better jobs too.

The face of poverty in the UK is changing and in-work poverty has increased over recent decades. The latest data shows – for the first time – that more than half the 13 million people experiencing poverty in the UK live in households where at least one person is working. This is an inconvenient truth for politicians fond of saying work is the best route out of poverty.

Discussion of "better jobs" often quickly turns to the topic of the living wage. That this debate is gathering momentum is welcome, as higher pay is an important part of the fight against poverty. Industries with large numbers of low paid jobs such as retail, hospitality, personal services and care have higher rates of poverty among their workers compared to other industries.

But the relationship between low pay and poverty is not straightforward, not least because poverty is measured according to household income, meaning who you live with - and their circumstances - influences your likelihood of being in poverty. Analysis by the New Policy Institute shows that over half (56 per cent) of adults in working poverty live in households where at least one person is paid below the Living Wage. But that means nearly half do not, so higher pay provides half an answer to in-work poverty.

As well as higher pay, a better job means sufficient hours, security and the opportunity to progress. Part-time work is prevalent among families in working poverty, indicating that more good quality part-time work – especially for those with caring responsibilities – is important too. But the UK has a large number of low-paid and low-skilled jobs compared to other developed countries. Surveys find these workers are more likely to face insecure or temporary contracts and less likely to receive training from their employer, hampering their chances of progressing to a different job.

What is more, many businesses offering low pay and poor terms and conditions are able to survive using a low cost, low quality approach to their business. They have no difficulty hiring people into jobs that require little by way of formal skills and training. However, there are examples of individual businesses in low pay sectors constructing a business case for "better jobs". The precise argument varies, but examples include better pay and progression to reduce the cost of labour turnover and sickness absence; to improve service quality; and to ensure a "pipeline of talent" to support organisational growth.

But such business cases need to be backed by capable managers, an organisational culture that promotes progression and worker engagement. They also need a coalition of champions within the organisation – from senior managers to union representatives and individual staff members – to maintain momentum. Otherwise policies that look good on paper can fail to deliver in reality.

The challenge is how to spread better business practice and drive up employer demand for skilled workers in order to grow the economy and tackle poverty. The government’s City Deal process, whereby powers and responsibilities linked to economic growth and skills and are devolved to major cities, offer an opportunity for more experimentation in this area.

Nonetheless, the IFS projects that poverty will increase by 2020, largely as a result of cuts to benefits for both working and non-working low income families, but made worse by anticipated changes to the labour market. The coalition’s primary answer is to reform welfare to make sure it always pays to work more. This is a worthy goal, but welfare reform alone will not address poverty unless the quality of jobs at the bottom end of the labour market is also addressed.

Katie Schmuecker is Policy and Research Manager at the Joseph Rowntree Foundation

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Theresa May gambles that the EU will blink first

In her Brexit speech, the Prime Minister raised the stakes by declaring that "no deal for Britain is better than a bad deal for Britain". 

It was at Lancaster House in 1988 that Margaret Thatcher delivered a speech heralding British membership of the single market. Twenty eight years later, at the same venue, Theresa May confirmed the UK’s retreat.

As had been clear ever since her Brexit speech in October, May recognises that her primary objective of controlling immigration is incompatible with continued membership. Inside the single market, she noted, the UK would still have to accept free movement and the rulings of the European Court of Justice (ECJ). “It would to all intents and purposes mean not leaving the EU at all,” May surmised.

The Prime Minister also confirmed, as anticipated, that the UK would no longer remain a full member of the Customs Union. “We want to get out into the wider world, to trade and do business all around the globe,” May declared.

But she also recognises that a substantial proportion of this will continue to be with Europe (the destination for half of current UK exports). Her ambition, she declared, was “a new, comprehensive, bold and ambitious Free Trade Agreement”. May added that she wanted either “a completely new customs agreement” or associate membership of the Customs Union.

Though the Prime Minister has long ruled out free movement and the acceptance of ECJ jurisdiction, she has not pledged to end budget contributions. But in her speech she diminished this potential concession, warning that the days when the UK provided “vast” amounts were over.

Having signalled what she wanted to take from the EU, what did May have to give? She struck a notably more conciliatory tone, emphasising that it was “overwhelmingly and compellingly in Britain’s national interest that the EU should succeed”. The day after Donald Trump gleefully predicted the institution’s demise, her words were in marked contrast to those of the president-elect.

In an age of Isis and Russian revanchism, May also emphasised the UK’s “unique intelligence capabilities” which would help to keep “people in Europe safe from terrorism”. She added: “At a time when there is growing concern about European security, Britain’s servicemen and women, based in European countries including Estonia, Poland and Romania, will continue to do their duty. We are leaving the European Union, but we are not leaving Europe.”

The EU’s defining political objective is to ensure that others do not follow the UK out of the club. The rise of nationalists such as Marine Le Pen, Alternative für Deutschland and the Dutch Partij voor de Vrijheid (Party for Freedom) has made Europe less, rather than more, amenable to British demands. In this hazardous climate, the UK cannot be seen to enjoy a cost-free Brexit.

May’s wager is that the price will not be excessive. She warned that a “punitive deal that punishes Britain” would be “an act of calamitous self-harm”. But as Greece can testify, economic self-interest does not always trump politics.

Unlike David Cameron, however, who merely stated that he “ruled nothing out” during his EU renegotiation, May signalled that she was prepared to walk away. “No deal for Britain is better than a bad deal for Britain,” she declared. Such an outcome would prove economically calamitous for the UK, forcing it to accept punitively high tariffs. But in this face-off, May’s gamble is that Brussels will blink first.

George Eaton is political editor of the New Statesman.