The UK’s unemployment rate is at a ten-year low of 4.8 per cent. However, recent reports suggest that this was achieved at the cost of a rise in ‘in-work poverty’. Research by the York-based Joseph Rowntree Foundation (JRF) shows that one in eight workers in the UK are living in poverty, an increase of 1.1 million since 2010/2011, when the economic recovery began.
Post-financial crisis policies focused on job creation and on spurring growth are to blame. The dominant idea was that deregulating the workforce would make hiring and firing easier for enterprises which, less affected by fixed costs, would ultimately become more competi-
tive and create more jobs.
While growth rates have bounced back and far fewer people are unemployed, the government failed in the past ten years to cope with the transformations in the structure of the labour market.
Historically, temporary workers constituted a marginal proportion of the working force and provided employers with a stopgap solution for permanent workers who were ill or on vacation. The recent increases in the flexibility of the labour market created many temporary jobs and only a few full-time jobs, breaking that historic relation apart.
Today companies such as Sports Direct or McDonalds employ up to 90 per cent of their workers under zero-hour contracts. Five million people, according to research by the University of Hertfordshire, are earnings incomes in the rapidly growing ‘gig economy’. This includes jobs such as Uber drivers or delivery workers employed by Deliveroo.
People looking for occasional earnings and easy-going working hours certainly benefited from the growing availability of these new occupational forms. Under this flexible framework employers can adapt their employment levels to suit demands with more ease and supposedly benefit from harder working employees. However, ‘zero hour’ contract jobs in the ‘gig economy’ are hardly fitting the needs of those that shifted to them because of the current shortage in full-time jobs.
Workers in the ‘gig economy’ are considered self-employed. This means they get payed for the ‘gigs’ they perform such as a food delivery or a taxi journey instead of a fixed salary. Not eligible to receive the national living wage, or holiday and sickness payments, ‘gig workers’ face little employment protection.
Research by The Resolution Foundation found that temporary workers are paid up to six pounds less an hour than other workers, meaning that people reliant on temporary jobs often have to work longer hours at the expense of more social and restful activities.
The economic instability and insecurity faced by many temporary workers is partly responsible for the high levels of anxiety and stress across the UK. A fluctuating and uncertain salary could pose difficulties to a parent when facing the current high childcare costs. The JRF report notes that in the UK 2.6 million children are in poverty despite being in a working family.
Alongside creating this new precarious employment model, the erosion of the standard employment relationship has had a negative effect on workers’ bargaining power. Real-term wages have stagnated over the past ten years while living costs have skyrocketed. The Resolution Foundation showed that home ownership among the ‘just about managing’ fell from 59 per cent to 26 per cent between 1995 and 2015. With the housing crisis expected to further increase private sector rent, more people suffering from stagnant wages and insecure jobs are likely to fall into poverty.
The JRF said that: “The UK economy is not working for low-incomes families. As it negotiates Brexit, it is vital that the government does not allow its focus to slip from the domestic concerns that make a huge difference to people who are just about managing”.
Along with building more homes and cutting costs for renters, the government should make sure that every worker gets a fair day’s wage for a fair day’s work.
While preventing the creation of temporary jobs in this time of technological advancement will be close to impossible, it is necessary to make the ‘gig economy’ fairer. Giving temporary workers bargaining power would free them from the exploitation trap they are in and allow real-term wages to rise again in accordance to the living costs.
Growth and employment alone will not prevent more people on low incomes from falling into this form of poverty in the future.