What would be your single economic response to the issue of working poverty? #cgeni

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This was one of the questions asked at this morning’s NICVA Centre for Economic Empowerment conference on Generation X and Working Poverty.

cgeni roomWorking households now make up the majority of those in poverty. Low pay, the rise of part-time and temporary working, high costs of housing and childcare all contribute to the growth. But what practically can government or organisations or individuals do?

  • 26% of NI employees are paid below the Living Wage (£7.45/hour). This is the highest proportion in the UK. (London 17%; Scotland 20%; North West England 23%; Wales 25%.)
  • The proportion of out-of-work (“workless”) NI households in poverty has dropped from 58% in 2006/7 to 48% in 2011/2, while the proportion of in-work households in povery has risen from 42% to 52%.
  • 24% of part-time workers in NI say they would like a full-time job but cannot find one.
  • The average cost of full-time childcare for a two-child family in NI is £16,432 while the median gross annual earnings (pre-tax) is £23,900.

In sessions chaired by William Crawley, the delegates heard from three speakers. You can listen back to their talks as well as the ensuing discussion.

Tom MacInnes from the New Policy Institute defined poverty as lacking the resources to participate in the “norms” of society. His figures showed poverty increasing for all age groups in Northern Ireland except pensioners, and the increases were greater than in Great Britain.

working and workless in povertyThe number of 16-29 year olds in both working and workless poverty has risen over five years. For 45-55 year olds, there’s an increase in workless poverty levels have remained static but there’s an increase in working poverty. He acknowledged that the churn in the labour market means that many people float between working and workless poverty.

Graeme Harrison from Oxford Economics brought another economic perspective and posed many questions. Weren’t policies addressing poverty mostly geared towards elderly people despite there being more poverty in working households? Would it be good for DSD and DETI to work together to collectively develop social and economic policies? (Many issues overlap economic and social policy areas, including taxation and subsidies; skills; pension regulation and migration.)

He suggested that low wages and low hours are partly responsible for the rise in in-work poverty. So do does a lack progression opportunities in many places and types of employment. While acknowledging that it couldn’t happen overnight, he asked why Northern Ireland couldn’t be known for world-class childcare provision. We were relatively well funded. In the panel discussion afterwards, the DUP’s Lee Reynolds commented that Finance Minister Simon Hamilton was “very interesting in the Scandinavian model” … before clarifying that he was referring to “the Scandinavian economic model!”

Graeme imagined Michael O’Leary being let loose for a few weeks in the NI Executive to find savings and areas for cuts and concluded his talk with suggestions for addressing working poverty:

  • increasing take home pay, but linked to increased productivity;
  • increasing labour mobility; and
  • making it easier to have dual-working families;
  • need for quantification around forward-planning and target-setting for the NI labour market. If Northern Ireland had to survive on its own, it would be much faster to develop niche economic growth.

The rubber bald tyres hit the road when Jack Monroe got up to speak and the topic switched from figures on charts to an explanation of her own struggles with poverty.

Poverty isn’t a cosy frugality …

There was nothing cosy about her experience turning off her heating, and turning off her fridge since she could neither afford to run it nor had any food inside it. Statistics show that four out of five people referred to food banks in the UK don’t go. Jack said that it felt like begging.

Jack went from being “a young, confident woman with a job” to being jobless, moneyless, depressed and suicidal. “Eighteen months on the breadline where there was no bread.” Knowing the pain of hunger and the need to feed her son but not herself.

51zCskqBeaL._SL250_She also brought to life the problems involved with getting back to work: the difficulty in job-hunting, the gap between paying up-front for childcare and your wages arriving; rent arrears; the lag in benefits being calculated and being paid. All the while battling the mental health problems exacerbated by her situation.

Later in the conference, Jack pondered that if the UK has money for “vanity projects like the HS2” and can pay for overseas wars, why does the UK government not have ‘a few million to feed starving children”? While now an author and out of poverty, her vivid recollections were a moving reminder against complacency and ignoring the issues at hand.

panel betterAs well as Q&A from the conference delegates, a three-person panel reflected on each speaker’s contributions.

Nicola McCrudden from the Housing Rights Service was (naturally) keen to see investment in social housing, quoting statistics that said for “every £1 invested in construction, £2.80 goes into the local economy”. She also reminded delegates that the “household” in the phrase “a good household wage” includes children as well as one or two adults.

Fergus Cooper heads Save the Children in NI and pointed out that while the economic data being shared at the conference focussed on earnings, it was also important to examine expenditure (including the changing cost of goods and services). He highlighted the number of food banks being run across NI and suggested that most churches were now contributing to their own or another food bank and helping to feed households in need.

Save the Children launched a report this morning: A Fair Start for Every Child. Their Northern Ireland briefing suggests:

If trends continue, levels of absolute poverty in Northern Ireland could reach 38% by 2020, leaving thousands more children than predicted at risk of entering poverty.

Save the Children make three recommendation “to ensure that all children have a fair start in life, regardless of their background”:

  • Every family to have access to high-quality and affordable childcare.
  • A minimum income guarantee for the families of children under 5.
  • A national mission for all children to be reading well by 11.

Our political class is sleepwalking towards the highest levels of child poverty since records began.

Lee Reynolds, Belfast City Councillor and DUP Director of Strategy recalled that only “a couple dozen workers” were impacted when the city council introduced a living wage and reckoned that the issue was much more private sector focussed. He advocated a “Clintonian” approach in order to get the economy working and enable good things through that foundation. He admitted that state-funded childcare was a frequent point of discussion when preparing party manifestos and was his personal pick of the ideas voiced today to address poverty … though he stopped short of making up DUP policy on the hoof!

delegates hands upDelegates were asked to formulate their single sentence economic response to working poverty. Answers included:

  • having more people who have experiences poverty in politics
  • universal child care to help children, women and families
  • genuine and enforceable employment rights
  • single education system
  • living wage
  • rent control
  • nationalising banks
  • not introducing welfare reform in NI until England has proved it’s working

What would be your single economic response to the issue of working poverty?

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  • Morpheus
  • Am Ghobsmacht

    Right, well, here’s my dotty idea.

    It’s based on my own brand of ‘wreckanomics’.

    I am singularly clueless about economics and have no position of authority on the matter and I welcome the demolition of this flight of fantasy so that I can lay it to rest.

    1st point, make the manufacturing sector ‘tax free’ (assuming it’s as pitifully small as I’m led to believe).

    2nd stage, exempt the manufacturing sector from minimum wage IN TANDEM with free/cheap social housing, free childcare and (possibly) a scheme to subsidise healthy food at these work places.

    The above two stages could make the UK more attractive to investors and companies.

    3rd stage (to be implemented upon a labour shortage should the first two stages actually work) a time limit on how long one can stay on benefits e.g. a year or whatever. This is to stop a reoccurrence of having to bring in overseas workers to fill the jobs that have been created, by stopping this influx it takes pressure off the rental market, ergo property market and cost of living.

    So, (in mad theory) jobs are created, people are working and have no worries about housing (provided already), healthcare (provided), healthy food (provided), childcare (provided) plus it takes a large number of people out of the benefits system.

    IF this idea actually works and hasn’t wrecked the country then in theory there might be more money in the public kitty which could (hopefully) be used to reintroduce free higher education as well as skills training.

    This is to help people ‘move up the ladder’ if they want to.

    If dozens of factories, breweries, distilleries and wot-not were to open then this would obviously create a demand for engineers and managers too.

    Work. Housing. Education. Childcare. Efficiency?

    Meh!

    Like I say, I have nothing to base this on, so, please, ay economic big wigs or ‘realists’ please lace up your Doc Martin boots of cynicism and tell me the flaws, and I’ll ponder accordingly.

    Much obliged.

  • gendjinn

    One time tax on assets:
    * 20% of 1 million to 10 million
    * 40% of 10 million to 100 million
    * 80% of > 100 million

    That or 1786 – either way works for me.

    Fuck they wealthy, they only got there because they stole it from us.

  • http://www.thedissenter.co.uk thedissenter
  • Outforawalk

    Landlords are a huge problem for working class areas. Come in and buy cheap housing executive housing and then rent them out far above what the original rent would have been. Not to mention the tons of bad landlords who leave people to live in terrible housing with dampness and the likes.
    The benefit trap needs to end. People earning minimum wage with kids are sadly better off on the dole.

  • Old Mortality

    Am Ghob

    1. Removing corporation tax on manufacturing would fall foul of EU competition rules. The Irish were obliged to remove their 0% rate on manufacturing and compromised on a 12.5% universal rate. A significant cause of their subsequent problems, in my opinion.
    2. Free or very cheap social housing is always open to abuse through secondary letting. I don’t think reducing the minimum wage would have much effect but a reduction in social security benefits would, although you still have the difficulty that you can’t pay someone more for the same job because he has more dependants.
    3. Assuming continued EU membership, I don’t see how you can prevent immigrant workers taking the jobs anyway, just as they do now. Again, the fundamental problem is the perversity of the social security system.

  • http://www.secondnature.ie Michael

    Mirror every economic policy alive in the ROI – a single Island economy would provide the attractiveness to invest up here as it does down there. The boom paused their work in the south – that was uniquely related to housing and construction. The rest of their economy was ok.

    That slow grow policy of creating preferential tax regimes such as the IFSC, lowering the cost of doing business (not labour costs), investing in education to meet the needs, and facilitating indigenous business to fractal off from the big guys to create locally owned wealth generators. The tax will come from higher wages. It has to be a focused investment over a period of years and national policy has to enable local actions.

    Potential areas for focused investment: education (as a product to sell as there is lots of expertise); tourism and creative arts (incl film); bio-tech; engineering; and IT.

    Derry, Newry, Ballymena, and Belfast could be centres of excellence to facilitate this – oh and invest in infrastructure like broadband and offices.

  • aquifer

    Stop enforcing idleness. Give the long term unemployed dole breaks, getting the dole while being allowed to earn extra doing casual work.

    Stop paying incremental hush money to civil servants and instead train some young people.

    Build more big warm sheds to work in. It rains a lot here.

    Fly people into London to work, 3 days on 3 days off, working long hours and using the same accommodation.

    Remove rates on restaurants and coffee shops.