More workers living on low incomes now than in depths of recession
More people are living on low incomes than during the recession in 2008 despite an increase in employment, according to a new study. Families face an increased risk of falling below minimum-income standards even with more work and slightly better pay, said the Joseph Rowntree Foundation (JRF).
Among households struggling to make ends meet, six in 10 have someone in work, the research found. Cuts in benefits have outweighed improved job prospects to contribute to an increase in the risk of having too little income to meet the minimum income standard (MIS) – based on what the public say is needed for an acceptable standard of living, said the report.
The report identified 11.6 million people living below MIS in 2013/14, 28% of individuals covered by the research. This was up from 21% in 2008/09, an increase of about a third over the period.
But JRF officials said there were encouraging signs, such as growing employment and a return to growth in the economy which slowed the increases in the number of people falling short of a decent living.
Katie Schmuecker, policy and research manager at JRF, said: “Work is the best route to economic security and a better standard of living, and we welcome record levels of employment.
“But as well as more jobs, we need better jobs so all families can benefit from economic growth. Despite working full-time hours, more families are still falling short of what they need to make ends meet. We need the state and businesses to ensure people in work can achieve economy security.
“The upcoming national living wage is an important step towards building a society with higher wages and a lower need for welfare, but it won’t take all of the strain.
“Alongside topping up the earnings of low-income families, more needs to be done to address skills shortages and encourage the creation of more productive jobs that can create prosperity for all.”
Owen Smith, shadow work and pensions secretary, said: “This report shows the truth that millions of families already know. It’s getting harder and harder for working families to make ends meet, as under this Tory government we are seeing the lowest rate of pay growth for a century.
“Instead of doing anything to help Iain Duncan Smith is about to make things much worse. The Tory cuts to Universal Credit will leave more than two million low and middle paid working families £1,600 a year worse off.
“This report is yet more evidence that the Tories should listen to Labour’s demands to reverse the cuts to Universal Credit.”
A Treasury spokeswoman said the Government was determined to deliver a “new settlement” for the British people.
“Our welfare reforms ensure that the system is fair both for those who need it and the taxpayers who fund it. But there’s more to be done, which is why we are introducing a new National Living Wage which will boost the pay of almost six million people.
“Together with the further increases to the personal allowance this year people will keep more of the money they earn by paying less income tax.
“We’re also taking action to support working families by freezing fuel duty, helping councils to freeze council tax bills and offering 30 hours of free childcare to all working parents, because evidence shows that the best route out of poverty is work, not benefits.”