Working poverty analysis 2019

Evidence on those households that are in poverty even though someone is working.

  • ‘In-work’ or working poverty describes households who live in relative poverty even though someone in the household is in paid work. Working poverty is of particular concern in tackling poverty given that the majority of the working-age population in relative poverty now live in working households (59% in 2014-17 compared to 48% in 1996-99).  
  • A household is in relative poverty if the equivalised household income is below 60% of the UK median income in the same year.  
  • Low pay and the number of hours worked by households (‘work intensity’) have been identified by research as key factors that influence working poverty.
  • Poverty is measured at the household level. This means that the relationship with low pay (measured at the individual level) is not straightforward. Additionally, in this paper work intensity is calculated at the household level – as the total hours worked by all adult household members divided by the number of working-age adults in the household. 
  • Around two thirds of working adults living in poverty were paid below the real living wage.  
  • Low-paid workers are more likely to work part-time (less than 30 hours) compared to all workers, and less likely to have a permanent contract. 
  • However, in almost 3 in 10 households in working poverty, no one in employment was low-paid.
  • Households in working poverty work fewer hours per week than all working households. Moreover, almost three quarters of people in working poverty in Scotland live in a ‘low work intensity’ household.  
  • Households in working poverty are more likely to have young children than the general population. Parents’ ability to increase working hours is often dependent on the availability of flexible working and affordable childcare. 
  • Overall, 4 in 10 people (including pensioners and children) in working poverty live in households where all workers were in low pay and the household had a low work intensity, while around a quarter live in households with no worker in low pay but low work intensity. 
  • This analysis highlights that addressing low pay and low work intensity are key in reducing working poverty. Possible interventions may include support to find better paid work or more hours of work, and addressing the barriers to entering work, taking on more hours of work or better paid work. Better understanding these barriers and the support households need to overcome them is vital and an area for further exploration.
Poverty and employment
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