Communities Economy

Making the economy work for people on low incomes

With nearly a quarter of people in Wales living in poverty once housing costs are taken into account (24%), ways to alleviate this have been a key area of focus for the Assembly’s Equality, Communities and Local Government Committee. The Committee published its report on making the economy work for people on low incomes on 23 May.

13 July 2018

Darllenwch yr erthygl yma yn Gymraeg | View this post in Welsh

On Wednesday, 18 July, Assembly Members will debate the Equality, Local Government and Communities Committee report, Making the Economy Work for People on Low Incomes. This article, originally published on 23 May 2018, is being re-published ahead of the debate.

With nearly a quarter of people in Wales living in poverty once housing costs are taken into account (24%), ways to alleviate this have been a key area of focus for the Assembly’s Equality, Communities and Local Government Committee. The Committee published its report on making the economy work for people on low incomes on 23 May.

Figure 1: Percentage of individuals living in households with less than 60% of median UK household income (after housing costs), 2014-15 to 2016-17

Not all of the policy and financial levers needed to reduce poverty are in the hands of the Welsh Government. Therefore, the Committee highlights that the Welsh Government will need to use its powers creatively to ensure that people in Wales have access to good quality work, which provides a decent income.

So what have people told the Committee about the best ways to boost the income levels of those in greatest need, and what has the Committee recommended that the Welsh Government does to achieve this?

How do people on low incomes think governments can make the economy work better for them?

The Committee has published a video setting out the key issues raised by people not in work or in in low-paid work, including the following:

Job opportunities:

  • Contributors from across Wales felt that there was work available, however much of this was low paid.
  • People entering the workforce from school considered that they faced difficulties securing work due to their lack of experience.
  • A number of single parents felt that they faced specific challenges in finding flexible work.

Pay:

  • There was a view that low pay is not enough to live on, instead workers ‘scrape by’.
  • Larger companies should pay the voluntary living wage (currently set by the Living Wage Foundation at £8.75 per hour)
  • Paying the voluntary living wage would help to improve the emotional wellbeing of workers

Zero-hours contracts:

  • Employers ask people to do shifts at late notice, and workers feel they have to take up the shift as they will not be offered work in future if they do not.
  • Working on zero-hours contracts makes it difficult for workers to plan finances.
  • The uncertainty around working hours causes stress and anxiety.

The Committee also heard from participants about a wider range of areas, including transport; barriers to accessing training and support; difficulties with Universal Credit and the benefits system; and the lack of social housing.

What did the Committee recommend the Welsh Government should do to assist people on low incomes?

The Committee has made 23 recommendations to the Welsh Government on a variety of areas.

  • On zero-hours contracts, it has recommended that any company receiving Welsh Government support minimise its use of these contracts.
  • It recommends that the Welsh Government develops a wide-reaching campaign to increase payment of the voluntary living wage in the private and public sectors, and incentivises payment of the voluntary living wage when considering applications for business support under funding streams covered by its new Economic Contract.
  • In the foundational economy which provides essential goods and services for everyday life such as retail, health, and care, the Committee recommends that the Welsh Government sets out the improvements to pay, security of work and training it requires in return for the greater support these sectors will receive.
  • It also recommends that the Welsh Government should work with employers to improve workforce progression within foundational sectors, and address inequalities facing the predominantly female workforce.
  • The Committee also drew attention to the gender pay gap in Wales, and recommends that the Welsh Government requires companies it provides financial support to, that employ 50-249 staff, to publish data on gender pay gaps (companies employing 250 or more staff are already covered by the UK Government’s requirements).
  • It also recommended that the Welsh Government publishes an action plan setting out what the Welsh Government will do to help reduce the gender pay gap.

What happens next?

The Committee’s report and recommendations will now be submitted to the Welsh Government for its consideration.  A response is expected from the Government within the coming months. Once this has been received there will be a Plenary debate on the report.

The Welsh Government has also established a Fair Work Commission, which will look into many of the issues raised by the Committee’s report and more widely by people and organisations. This will be led by an independent Chair, be gender balanced, and will report by March 2019.


Article by Gareth Thomas and Megan Jones, National Assembly for Wales Research Service
Source: Department for Work and Pensions, Households Below Average Income 2014-15 to 2016-17