The coalition government must introduce specific, targeted policies to help move 10 million people out of low skill, low wage employment as well as hit poverty reduction targets, a think tank has warned.
According to the Work Foundation, an estimated 10 million people in the UK currently earn less than £15,000 per annum and are often “trapped in a revolving door” between low paid, poor quality work and unemployment.
This is because they are more vulnerable to pay cuts as a result of reductions in hours and falls in real wages during difficult economic times. Moreover, job losses are concentrated in low wage sectors and occupations – that is unskilled and skilled and semi-skilled manual and administrative workers – but such posts tend not to return even when economic recovery begins.
But measures such as the introduction of a universal tax credit will not be enough to move a hoped for 500,000 working age adults out of poverty through employment and the take up of in-work benefits, particularly in areas of high unemployment and poor local wages.
In towns such as Blackpool, Grimsby and Hull, for example, about a third of residents already earn less than £7 per hour, which is below Minimum Living Wage levels.
The Work Foundation said in its report entitled ‘Welfare to What? Prospects and challenges for employment recovery’: “Both the geography of the recovery and the public spending cuts are likely to widen spatial disparities and exacerbate the problems of labour demand deficiency at the local level. With the accelerating pace of job loss in the public sector and lack of overall growth in the private sector, initial signs of recovery in employment have been halted.”
As a result, it called for the government to develop a sustained strategy for growth that would engage businesses and other organisations on a more systematic basis. There should also be a focus on getting people into jobs that offered more than 16 hours work per week as such a situation would have a big impact on low income households.
Labour market intermediaries, which included private, public and voluntary organisations either listing employment vacancies or referring or placing candidates in employment, should be encouraged to focus on the ‘Bottom Ten Million’ rather than simply dealing with skilled and specialist workers or those moving from unemployment into the workplace.
Local employers should likewise be supported in helping disadvantaged groups to secure sustainable positions and provide workers with additional skills and experience to ensure job progression.
The problem of skills under-utilisation also needed to be addressed because, without such activity, training had only a limited impact on improving individual’s employment prospects, the report said.
Finally, the government should reconsider its policy of encouraging disadvantaged groups to become self-employed due to the risk of simply swapping one form of precarious, low income existence for another without any long-term benefits.