Now is the time for employers to take action on in-work poverty

Morgan Bestwick, Policy and Partnerships Officer (Work), Joseph Rowntree Foundation

For too many people, jobs are not working. Work should offer a clear route out of poverty, yet the Joseph Rowntree Foundation (JRF)’s most recent UK Poverty report shows that one in eight workers in the UK (13%) are currently experiencing in-work poverty. This means that despite working, they may be unable to make ends meet or cover their essential living costs.

The COVID-19 pandemic and its economic impact have exposed the quality of work as both a public policy and public health issue. Many of the key workers who have kept communities going earn less on average than the national median wage, while many have been at greater health risk because they are less likely to be able to work from home. And for low-paid workers who have already borne the economic brunt of the pandemic, the looming cost of living crisis is already beginning to bite.  

As we move into the recovery, now is the right time for employers to ensure they are playing their part in loosening the grip of poverty on workers across the UK, helping their employees to achieve a decent standard of living, and committing to providing good work.  

What traps people in in-work poverty?

In-work poverty can be caused by a wide range of factors. Whilst some, like low pay or insecure hours, are about what happens in the workplace, others, like the rising cost of living, are about the pressures weighing on people outside of work.

To help illustrate the different ways in-work poverty can manifest for people and families across the UK, we teamed up with the CIPD to create a set of animated portraits grounded in the realities of in-work poverty – showing the impact of issues from insecure working hours, to struggling with debt, or trying to keep up with spiralling housing costs.  

In recent years, costs outside of the workplace have been eating up some of the income gains made at work. Annual increases to the National Living Wage, and growth in earnings  for families on low incomes, have been welcome in boosting people’s pay packets – but despite this, more working families have been pulled into poverty as rising housing costs have eaten up a greater proportion of their income. This can be particularly stark in areas with higher housing costs such as London, as shown in Chris’ story.  

Inside the workplace, a lack of good quality part-time working opportunities in higher paid roles means that people who need flexibility to fit around caring responsibilities can struggle to move onto higher pay. This can have a particularly severe impact on certain groups, including single parents, as shown in Lucy’s story. Single parents continue to have the highest in-work poverty level of all family types (JRF analysis of HBAI 2019/20).

And whilst wages have increased for many low-paid workers, too many people are still trapped in low-paid work with unreliable hours. Underemployment – being unable to work all the hours you want to – remains one of the key drivers of in-work poverty, whilst recent JRF analysis shows that lower-paid workers are much more likely to experience variation in their hours of work and pay than workers who earn more. Rajni’s story shows that even if you’re paid a fair wage, a lack of sufficient working hours can mean you struggle to stay afloat. And JRF knows from our recent project on in-work poverty how severe the impact of uncertain incomes and hours can be both on people’s finances and their wellbeing. Arriving at work only to have your shift cancelled, or being given incredibly short notice of your working hours, can have a huge knock-on impact on your personal life and finances – for some people it even means losing money in transport and childcare costs.  

Alongside each of these pressures on people’s incomes, JRF’s work with people who have experience of in-work poverty also highlights the importance of being treated with dignity and respect at work. Co-designers on JRF’s two year in-work poverty project shared that another compounding factor in their experiences of in-work poverty was not being treated as a human being by their employer, but instead as just a number, or a cog in a machine. In contrast, people gave examples throughout the project that showed us what ‘good work’ can look like: of supportive, understanding employers and businesses which provide good jobs as a matter of course. How people are treated is just as important for employers to act on as issues around pay, progression, financial wellbeing, or working hours.  

Why does this matter – and what can employers do?

In-work poverty, like any form of poverty, has a serious negative impact on individuals and families. Trying to budget on low wages and with uncertain working hours – or struggling to find a good job which fits around your caring responsibilities – can cause huge stress and strain. And worrying about how to stretch your income to cover the rising cost of living will sadly be a serious and growing concern for many households across the country.

But it doesn’t have to be this way. Government and employers can both play a role in addressing in-work poverty, which is why JRF is partnering with CIPD to share some of the key solutions employers can put in place to ensure they’re playing their part in tackling in-work poverty.

We know that many employers across the UK already work to ensure their employees are financially secure and stable, from paying the Real Living Wage, to implementing financial wellbeing policies and providing more secure working hours. This is the good practice we really want employers to share, learn from, and build on in their own workplaces.

Ensuring your employees’ financial wellbeing is simply the right thing to. It also has business benefits for an employer: research shows that worrying about money may impact on workplace performance whilst businesses who pay the real Living Wage report benefits including improved recruitment and retention.. 

Ultimately, there is a clear role to play for employers in tackling poverty - whether that’s introducing a financial wellbeing programme, changing working arrangements, or supporting people to progress onto higher pay.

To play your part in helping people make ends meet, visit the CIPD’s in-work poverty web hub to learn more about the solutions to in-work poverty which employers can start implementing right away.

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