The story of poverty has changed during my lifetime. In the 1990s the majority of those living below the poverty line in the UK were not working – because they were unemployed, or not able to work or retired. Two decades of work has gone into fixing this, with partial success – for example, more people are in work and many older people have higher pensions.
But it turns out that poverty hasn’t gone, it’s moved. The story has changed. We now have the highest rate of in-work poverty for a generation. A growing number of those using Foodbanks are actually in work. The ‘working poor’ now account for the majority of households below the poverty line. For a lot of people, work doesn’t pay.
If work is no longer a route out of poverty for millions of people then we have a serious problem. It suggests that the way in which our marketplace operates is really quite broken. The current rise in inflation and the ongoing cost of living crisis accentuate the need to find urgent solutions.
The reason why working poverty has risen is that the employment ‘floor’ in this country has too many holes in it. The Minimum Wage has – rightly and helpfully – been rising in recent years, but this has not been enough:
- The Minimum Wage still does not match the real Living Wage and may not for years – and remains nearly 20% below it in London
- The Minimum Wage falls even further below the real Living Wage for workers aged 22 or younger
- Sick pay for the many workers reliant on the statutory floor is amongst the lowest in Europe, and is non-existent for the lowest paid
- The income of many workers relies on zero-hours contracts or gig-economy jobs where hours fluctuate from week to week
- Some are underemployed – they need more hours but can’t get them
One response to this has been to lobby Government for more generous welfare support, particularly through Universal Credit. Ensuring that welfare provides a decent safety net is important, but I want to suggest another route too.
We need to consider the role of business.
If we are to have a successful economy, it is not enough to have a positive vision for the role of Government, we must have a positive vision for the role of business too. It can and should be part of the solution to working poverty. A biblical view of enterprise recognises that all employers have both wider social responsibilities and agency. A biblical view of work calls for both dignity and fairness.
It is also not clear why the taxpayer should effectively subsidise low-paying employers (via welfare to employees) particularly if those enterprises are profit-making. We should expect more from our nation’s businesses.
A great example of agency in the marketplace in recent years has been the rise of the Living Wage Movement – over 10,000 accredited employers (many of which are businesses) are now volunteering to pay the real Living Wage. Interestingly, through the pandemic the rate of accreditations actually accelerated. A sizeable number of businesses in the UK are prepared to act on their social responsibilities when given a clear opportunity to do so. This is worth celebrating.
We need to work with businesses to explore how they can play a greater role in tackling working poverty. In particular, we believe that there is an urgent need to explore how more employers can commit to:
- Paying the real Living Wage to all workers, of all ages
- Providing sick pay for all employees at the real Living Wage or higher for a minimum period
- Fixed hours contracts for low pay workers, recognising that zero-hours contracts don’t work for the low paid
We need to establish a clear new standard in the marketplace to drive down working poverty in the UK. We know that at its best, enterprise can be a force for good. Can we renew the mindset, culture and practices of our marketplace to contribute to the national renewal we all want to see?
Tim Thorlby is the Director of the Jubilee Centre