The cycle between work and the dole is trapping millions in poverty

With one in six of the workforce having claimed Jobseeker’s Allowance in the last two years, job insecurity is hindering attempts to reduce poverty.

By Aleks Collingwood

It’s important that in-work poverty is now firmly on the agenda. Research by the New Policy Institute for the Joseph Rowntree Foundation shows that, for the first time, more working families are in poverty than people in workless and retired families combined (52 per cent compared to 48 per cent).

But we must not lose sight of the fact that those in poverty, whether in work or out of work, are often the same people churning from low-paid, insecure and part-time employment to unemployment, and back again.

The reality is that the churn in and out of work, due to the economic climate, has never been larger and that people are constantly moving in and out of employment. It would be careless to talk about two distinct groups of people – those who work and those who do not. That would be easy. In reality, the situation is far more complicated. Between April 2011 and April 2013, 4.8 million different adults claimed Jobseeker’s Allowance: one in six of the workforce, two-fifths of whom had never previously claimed.

There is good news, though. The number of workless households is at its lowest level since 1996, when the data series started. Only a small minority of these workless households are ones where no adult has ever worked (8 per cent, or 1.5 per cent of all households). And the proportion of households who experience worklessness in a given year has generally been falling since 1996, from around 21 per cent (with 1 per cent never having worked). There was a rise in 2009 as the recession began, but now it is decreasing.

This fall cannot be attributed solely to an increase in employment, as it also reflects changing household formation. There has been a large increase in the number of young adults living with their parents. Households where no adult has ever worked are likely to contain much younger people. More than half of those in never-worked households are under 25, compared to only 13 per cent in currently workless households. Almost half (48 per cent) living in households where no one has ever worked are students.

As George Osborne said in the Autumn Statement, the labour market appears to be improving at last. Unemployment and underemployment have stopped rising and workless households have decreased. This good news masks the fact that when people do get into work, they are more likely to be paid below the Living Wage (as five million people are) and millions are trapped between poorly paid, insecure jobs and unemployment.

But the insecurity faced by people trying to get into and stay in work still remains a huge problem and is hindering attempts to reduce poverty. That insecurity means millions of people are stuck in a cycle – churning between work and the dole. It would be better if government policy and announcements reflected that.