Washing hangs out to dry in the London borough of Tower Hamlets on February 21, 2013. Photograph: Getty Images.
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Three ways the recovery could turn the rising tide of poverty

History tells us growth doesn’t always filter to the poorest – here’s how it could.

Economic news has been noticeably cheery recently. Today, the ONS announced the economy grew by 0.8 per cent in the first quarter of 2014 – the fifth successive period of GDP growth. Yesterday, the CBI reported survey results showed business optimism at its highest since the survey started in 2003. And two weeks ago, the ONS reported that wage growth had caught up with inflation and that there were 239,000 more people employed between December 2013 and February 2014 than in the previous three months. 

There are caveats to this good news. When bonuses were excluded, wage rises were still lower than inflation. On employment, 61 per cent of the rise was in self-employment, which is associated with higher poverty and can indicate that people are struggling to find jobs in other parts of the economy. But the general trends are looking positive.

We are not cheering yet, though, because increasing evidence shows that a return to growth will not necessarily benefit those on low incomes. Evidence from the Resolution Foundation’s Commission on Living Standards analysed household incomes in the period of growth between 2003 and 2008. This showed that increases in low and middle incomes came mainly from tax credits; these families benefited remarkably little from economic growth itself.

JRF’s research has shown that this is also the case when you look at the economies of cities: many of the cities which achieved the best economic growth saw poverty stay the same or get worse. A study examining the experiences of deprived communities showed that they were hit hardest by recessions, but did not necessarily benefit from recovery.

These studies highlight two important reasons why growth does not benefit those at the bottom. First, higher employment is the main way that growth reduces poverty but tends to be distributed unevenly with significant groups of people, and places, excluded. Second, since the early 1990s, improvements in productivity have increased wages for the top but not the bottom half of earners.

Our evidence suggests three ways to make sure the emerging recovery helps those on low incomes.

First, create better jobs as well as more jobs. For example:

  • Raise the National Minimum Wage and promote take up of the Living Wage.
  • Create industrial strategies for low pay/low skill sectors such as retail, care, hospitality, logistics and warehousing.
  • Address youth unemployment by improving careers advice and creating more and better apprenticeships.
  • Improve the design of Universal Credit so that people can keep more of the money they earn.

Second, improve the quality of childcare, as well as its affordability and availability, through: 

  • More generous, shared maternity and paternity leave.
  • Higher qualifications for staff who have or are working towards a childcare related level 3 qualification.
  • Using the new Early Years Premium to increase access to high quality childcare among children from low income backgrounds.

Third, reduce living costs:

  • Increase affordable housing by giving social landlords more flexibility around setting rents, reforming the private rental sector to provide more secure tenancies and supporting councils to build more social housing.
  • Reduce the poverty premium, where low income households pay as much as 10p in the £1 more for utilities and financial services. 
  • Reform policies on energy and climate change so that they do not further disadvantage low income households.

These steps would help us to avoid repeating the history of recoveries failing to help those who have suffered most in recessions.

Helen Barnard is a Policy and Research Manager for the Joseph Rowntree Foundation.

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Our union backed Brexit, but that doesn't mean scrapping freedom of movement

We can only improve the lives of our members, like those planning stike action at McDonalds, through solidarity.

The campaign to defend and extend free movement – highlighted by the launch of the Labour Campaign for Free Movement this month – is being seen in some circles as a back door strategy to re-run the EU referendum. If that was truly the case, then I don't think Unions like mine (the BFAWU) would be involved, especially as we campaigned to leave the EU ourselves.

In stark contrast to the rhetoric used by many sections of the Leave campaign, our argument wasn’t driven by fear and paranoia about migrant workers. A good number of the BFAWU’s membership is made up of workers not just from the EU, but from all corners of the world. They make a positive contribution to the industry that we represent. These people make a far larger and important contribution to our society and our communities than the wealthy Brexiteers, who sought to do nothing other than de-humanise them, cheered along by a rabid, right-wing press. 

Those who are calling for end to freedom of movement fail to realise that it’s people, rather than land and borders that makes the world we live in. Division works only in the interest of those that want to hold power, control, influence and wealth. Unfortunately, despite a rich history in terms of where division leads us, a good chunk of the UK population still falls for it. We believe that those who live and work here or in other countries should have their skills recognised and enjoy the same rights as those born in that country, including the democratic right to vote. 

Workers born outside of the UK contribute more than £328 million to the UK economy every day. Our NHS depends on their labour in order to keep it running; the leisure and hospitality industries depend on them in order to function; the food industry (including farming to a degree) is often propped up by their work.

The real architects of our misery and hardship reside in Westminster. It is they who introduced legislation designed to allow bosses to act with impunity and pay poverty wages. The only way we can really improve our lives is not as some would have you believe, by blaming other poor workers from other countries, it is through standing together in solidarity. By organising and combining that we become stronger as our fabulous members are showing through their decision to ballot for strike action in McDonalds.

Our members in McDonalds are both born in the UK and outside the UK, and where the bosses have separated groups of workers by pitting certain nationalities against each other, the workers organised have stood together and fought to win change for all, even organising themed social events to welcome each other in the face of the bosses ‘attempts to create divisions in the workplace.

Our union has held the long term view that we should have a planned economy with an ability to own and control the means of production. Our members saw the EU as a gravy train, working in the interests of wealthy elites and industrial scale tax avoidance. They felt that leaving the EU would give the UK the best opportunity to renationalise our key industries and begin a programme of manufacturing on a scale that would allow us to be self-sufficient and independent while enjoying solid trading relationships with other countries. Obviously, a key component in terms of facilitating this is continued freedom of movement.

Many of our members come from communities that voted to leave the EU. They are a reflection of real life that the movers and shakers in both the Leave and Remain campaigns took for granted. We weren’t surprised by the outcome of the EU referendum; after decades of politicians heaping blame on the EU for everything from the shape of fruit to personal hardship, what else could we possibly expect? However, we cannot allow migrant labour to remain as a political football to give succour to the prejudices of the uninformed. Given the same rights and freedoms as UK citizens, foreign workers have the ability to ensure that the UK actually makes a success of Brexit, one that benefits the many, rather than the few.

Ian Hodon is President of the Bakers and Allied Food Workers Union and founding signatory of the Labour Campaign for Free Movement.