Lowest paid stuck in ‘poverty trap’ as UK govt mulls fresh £30bn austerity round
Britain’s lowest paid workers are stuck in a “poverty trap” according to a new report, as three out of four are unable to negotiate a real terms pay rise. The report comes as ministers plan a further £30bn worth of spending cuts.
According to research from the Resolution Foundation, only a quarter of workers who were receiving low wages in 2001 were able to secure a pay rise in real terms by 2014.
The report also states those stuck on low income only saw their pay packets increase by 3.6 percent, while those on higher pay scales saw increases of 7.5 percent.
“Britain has a long-standing low pay problem, with over a fifth of the workforce in poorly paid jobs,” said the Resolution Foundation’s Deputy Chief Executive Vidhya Alakeson.
“But the limited opportunities for escaping low pay is just as big a concern as it has huge consequences for people’s life chances,” she added.
The report found that the effects of wage stagnation for low-paid workers particularly hit women, who make up three quarters of the UK’s 6.8 million part time workers.
According to the report, those who did not work full-time were less likely to see their wages significantly increase, particularly in low-skilled work.
The Resolution Foundation’s report, produced on behalf of the Social Mobility and Child Poverty Commission (SCMPC), also found wage stagnation was more common in vocational jobs, such as hospitality and retail.
“The majority of Britain’s poorest paid workers never escape the low-pay trap. Too many simply cycle in and out of low-paying jobs instead of being able to move up the pay ladder,” said the SCMPC Chair Alan Milburn, who is also the UK government’s “poverty tsar.”
“This research provides compelling evidence for employers and government to do more on pay progression. It is a powerful argument for Britain to become a ‘living wage’ country,” he added.
The report comes a day after the CBI annual conference in London, in which business leaders and academics called on the government to address wage pressures and the resulting ‘cost of living crisis’ in Britain.
Bosses called on the UK government to take low paid workers out of national insurance, while providing wider welfare measures to working families, such as the provision of free childcare.
The report’s findings come as the government is reportedly seeking a further £30 billion worth of public spending cuts, due to be imposed after next year’s general election if David Cameron’s Conservatives are returned to power.
According to inside sources cited by the Guardian, a significant number of cuts are being planned in the Department for Communities and Local Government, the main Whitehall department that co-ordinates funding to infrastructure and community projects.