Paul Sissons Blog

Employment, pay and poverty report reviews national policy

Dr Paul Sissons, with colleagues from The Work Foundation and the Policy Studies Institute, launched a report examining the links between employment, pay and poverty.

Funded by the Joseph Rowntree Foundation, the report assesses a range of employment interventions and their potential to support poverty reduction in the UK.

The aims of the research were:

  • To review the evidence on the links between employment, pay and poverty in the UK and to examine how this compares to other countries;
  • To review evidence on the impact of employment-related policy and practice interventions to address poverty;
  • To identify gaps in the evidence base; and
  • To identify the policy and practice implications of the evidence.

The findings from the report and policy implications for national policymakers are:

  1. Wage supplements (for example Tax Credits) – Are well targeted at low income households and there is a strong evidence base on their role in poverty reduction.  As such, wage supplements will need to remain a central element of any future strategy to reduce poverty.
  2. Benefit conditionality and sanctions – while evidence suggests that increasing conditionality for benefit claimants reduces welfare use and increases employment rates, there is very limited monitoring in the UK of the impact of changes to the benefits system on longer-term earnings and poverty outcomes. These will depend upon the quality of employment entered and the extent to which benefit take-up among the eligible is reduced.  There is therefore a need for further research to provide a clearer picture of the poverty impacts of increased conditionality.  There has also been an absence of monitoring of the poverty impacts of benefit sanctions. The number of benefit sanctions has risen significantly in recent years, and sanctions may result in hardship and debt which inhibit individuals’ ability to exit poverty.
  3. Post-employment’ welfare to work programmes – there is evidence (mostly from the US) that a range of strategies can boost longer-term earnings (albeit modestly).  These include financial incentives to individuals for staying in work, matching individuals to better quality jobs initially, programmes which support mobility to better paid work; and initiatives focused on skills (linked to progression pathways).
  4. Growing good jobs – Over the longer-term we need a shift in employment from lower to higher quality (and paying) jobs. This requires a comprehensive  low pay strategy from the Government. This could include The Low Pay Commission being given a wider remit to offer advice on causes, consequences, and potential solutions to low pay in the UK. It should also include establishing and testing new approaches to workforce development, skills utilisation and job design geared to promoting‘high road’ employment practices. 

While the report focused largely on national policy, there are also opportunities for local policymakers to develop employment policies which are targeted at poverty reduction.

  • New City Deals enable cities to shape policy in areas relevant to tackling poverty such as skills and transport.
  • Local Enterprise Partnerships will have a role in shaping the direction of European Social Fund (ESF) budgets, and this might encourage more joined-up thinking about linking economic growth with poverty reduction.
  • Public procurement is an important tool to be maximised around skills, jobs and wages.

More generally however it is important to acknowledge there are limits to what can be done at the local level, and that a coherent anti-poverty strategy needs to harness both national and local policy levers.

The report was launched at an event in Sheffield which was attended by an audience of academics, policymakers and practitioners.  Download Employment, Pay and Poverty:  Evidence and policy review.

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Nicola Vaughan

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