How can we tackle in-work poverty in the UK?

Emma Zimmerman introduces our latest impact case study, which looks at how research by the Living Wage Foundation (LFW) is supporting their ‘Living Hours’ scheme and helping deliver their mission to tackle work insecurity in the UK.

In-work poverty has been a growing problem in the UK for the past two decades. The Living Wage Foundation (LWF) is an independent organisation on a mission to tackle in-work poverty through campaigning for fair pay and fair working hours.

A woman with a mask on holding up a sign saying Over Worked, Under Valued, Exploited
Photo by Ehimetalor Akhere Unuabona on Unsplash

 

Since 2012, the LWF has led the ‘real Living Wage’ movement, which encourages employers to pay  an independently-calculated hourly wage that is sufficient to meet actual living costs. Living Wage employers are recognised and celebrated through an accreditation scheme that awards the Living Wage Employer Mark.

Over 9,000 employers across the UK are now paying the real Living Wage, meaning that the movement has put over £1.6bn into the pockets of low paid workers, and secured pay rises for almost 300,000 workers. The movement even inspired the UK Government’s approach to the minimum wage, with the National Living Wage (NLW) being introduced in 2016.

In 2020, we worked with the Institute for Employment Studies (IES) to develop a case study looking at their data-driven work on the impact of the NLW. Their work fed into decisions by the Low Pay Commission (LPC) and informed their recommendations for a subsequent NLW increase of 6.2% in April 2020.

However, their research also found that the NLW had little impact on working hours. In-work poverty remains an on-going problem in the UK, with many workers grappling with insecure contracts and unreliable hours, in addition to low pay. This is where the work of the LWF comes in.

Introducing the LWF case study

In June 2019, the LWF launched ‘Living Hours’, an additional accreditation scheme designed to provide workers with secure hours, predictable shifts and working contracts which reflect actual hours worked, alongside a real Living Wage. You can read more about the scheme and its key measures on the LWF website.

Research published by the LWF in 2021 provided sharper insight into the scale and severity of insecure work in the UK, especially in the context of the Covid-19 pandemic. Through presenting Living Hours as a key prevention mechanism, the research aimed to raise awareness of the scheme and drive employer accreditations, thereby increasing the number of workers employed in predictable, reliable, and secure jobs.

The data, approach and findings

The research used Labour Force Survey (LFS) and Family Resources Survey (FRS) data from the UK Data Service and Annual Survey of Hours and Earnings (ASHE) from the ONS. Each of these datasets have advantages and limitations when it comes to looking at the nature of work insecurity:

Dataset Advantages Limitations
Labour Force Survey (LFS) Invaluable source for looking at employment circumstances, due to breadth of employer and employee variables. Derives hourly wages from weekly/annual income and does not account for additional hours worked (e.g. unpaid overtime), which leads to inflated figures for proportion of workers earning below Living Wage.

No data on self-employed workers.

Family Resources Survey (FRS) Provides data on self-employment circumstances. Derives hourly wages from weekly income and hours worked, which leads to overestimation of number of workers earning below Living Wage.
Annual Survey of Hours and Earnings (ASHE) Accurate hourly pay data based on employer PAYE figures. Less detailed information on employee characteristics.

To draw on the strengths of all three datasets, and avoid potential duplication and derivation issues, the LWF adopted a hybrid model, using the LFS to evaluate employees and the FRS to evaluate self-employed workers. They developed a re-weighting methodology that pegged LFS data to ASHE, so they could retain the breadth of employee variables without compromising on the accuracy of hourly pay figures.

Running cross-sectional analysis on these re-weighted datasets, they were able to provide detailed insight into the extent of work insecurity in the UK, with key breakdowns by region, sector, gender, ethnicity, and disability. Their findings reveal that a fifth of workers in the UK experience work insecurity, although there is an uneven spread with Wales and the North East showing higher levels, and ethnic minorities and disabled workers being among the most disadvantaged.

The impact

As a result of their work, the LWF have successfully drawn attention to the ongoing severity of in-work poverty in the UK, and in doing so have raised awareness of the Living Hours scheme as a key prevention mechanism. The research gained substantial coverage in print and broadcast media, including in the Independent, Daily Mirror, and Big Issue, and since publication Living Hours accreditations have increased by 80%. As a result, 170 employees have been uplifted onto Living Hours contracts, bringing the total to around 32,000 employees in the UK.

Significant progress has been made in gaining local authority support for Living Hours, with the respective leaders of the Greater London Authority (GLA) and Greater Manchester Combined Authority (GMCA) committing to uplifting employees onto Living Hours contracts.

You can read more about the LWF’s methodology, key findings, and the impact of their work by checking out the full case study.

Access is key

What really stood out when talking to the LWF about their research was the importance of having access to high quality data that allows for forensic analysis of the state of the labour market:

The UK Data Service has been crucial to our research. The Service has provided us with the means to access the relevant labour market data needed to study low pay and insecure work […]. Without this access to the data, our labour market research would be significantly more difficult.

– Joe Richardson, Research Manager, LWF

It’s a core part of our mission here at the UK Data Service to enable impactful research through providing access to a wealth of social science data. Tracking the LWF’s work right through from the original datasets used to the impact achieved offers a prime example of the positive difference data-enhanced research is making in the world.

Regular readers of the Data Impact blog will know that this isn’t the first time we’ve explored how  key datasets in the UK Data Service collection are enabling better understanding and measurement of poverty and deprivation in the UK.

For instance, in 2020 we looked at how the Social Metrics Commission (SMC) used data from the Family Resources Survey (FRS), Households Below Average Income (HBAI), and Understanding Society to create a new poverty measure for the UK. With no existing official measure of poverty in the UK, the SMC’s measure has broken new ground, gaining widespread support and enabling more consistent poverty measurement and action. Check out the SMC case study for more information.

If you’d like to read more about how data in our collection can be used to calculate levels of poverty and deprivation in the UK, check out this two-part blog written by our Director for Impact, Neil Dymond-Green.

Thank you to Joe Richardson, Research Manager at the Living Wage Foundation, for working with us on the LWF case study. You can follow the latest developments in their accreditation schemes by visiting their website and following on social media @LivingWageUK and @JoeRichardson42.

 


Dr Emma Zimmerman was Impact Manager for the UK Data Service.


Featured image by Ehimetalor Akhere Unuabona on Unsplash

 

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