The growing problem of in-work poverty

Jocelyn Davies says the rise of zero hours contracts has seen growing poverty affect those in work in Wales.

Low wages and job insecurity are the hidden crises of the recession. The most recent figures show that unemployment in the UK is falling, in October it fell below 2 million people for the first time since the financial crash in 2008. This sounds like good news, a sign that the UK economy is finally recovering after bankers’ greed and irresponsibility drove it to collapse. But while David Cameron crows that falling unemployment means that the UK coalition Government’s financial plans are working, the lived experience of ordinary people tells a different story.

This week on Click on Wales

This week on Click on Wales, we hear from four Welsh politicians on the biggest issues affecting employment, for better or for worse, in Wales.

An assembly member from each of the parties represented in the National Assembly for Wales will offer their view, ranging from zero hours contracts and new employment practices to the impact of changing tax thresholds.

Hidden behind the official figures are stagnating wages and underemployment. Real wages have fallen by around 10% from their pre-recession peak and, for the first time, the majority of people in poverty in the UK are in work. In the 6th wealthiest country in the world, parents are having to go hungry just so their children can eat.

In Wales, 80,000 people were given emergency food aid at Trussell Trust foodbanks this year, a 124% increase on the previous year. 20% of those referrals were primarily as a result of low income.

Zero hours contracts have become emblematic of the problem of in-work poverty. Defined as contracts that offer no guaranteed minimum number of working hours to employees, zero hours contracts give employers total control over how much work each employee gets per week. They can require a worker to be available for work at all times, even if none is granted. This means someone can be essentially on-call for no pay. They also enable unethical bosses to avoid granting their staff the rights they might be entitled to, like maternity and paternity leave, sick pay, pensions and redundancy payments.

Zero hours contracts can be useful in some limited circumstances where flexibility is important, like students picking up some extra casual work. However, many on zero hours contracts feel trapped, earning too little, working too few hours and unable to find more secure work. The majority of workers on zero-hours contracts earn less than the living wage and their income can vary hugely depending on how much work is granted. Employees are left feeling powerless, having to wait round for work that might not appear or risk irritating a boss who could cut back their hours entirely and leave them with no work and no pay.

The stress of life on a zero hours contract is considerable. Workers are unable to plan ahead. Making arrangements for childcare or meeting other caring responsibilities is difficult without a regular schedule and, without minimum working hours, making enough money to pay the bills is a constant worry. No wonder one trade union calls them ‘Victorian’. They are a reversal of so many hard fought for workers’ rights.

The rise in zero hours contracts is partly a symptom of the recession 6 years ago. But evidence suggests that they may also be part of a broader long-term trend. The labour market is being polarised, with those at the top earning more and more while too many others are trapped in low paying, unskilled work with little chance for advancement. Competition for these jobs is high and with fast staff turnover, there is little incentive for employers to pay fairly or offer proper training and opportunities to progress.

However, this does not mean that we should resign ourselves to letting hardworking people live in poverty. The campaign for a fair living wage is a growing force and Plaid Cymru has made a living wage for all in Wales a key commitment for the general election. This would benefit 250,000 workers who are currently paid less than they need to get by.

But we must also make ending exploitative zero hours contracts a priority. I have been disappointed with the Welsh Government’s inaction on this issue. In March this year I put pressure on the Government to amend the Social Services and Well-being Act to stop local councils procuring care services from companies that use zero hours contracts. More than 300,000 workers in the care sector are employed on zero hours contracts, including 60% of domiciliary care workers who look after the elderly and disabled in their own homes. Carers provide an essential and undervalued service and deserve fair pay.

This was an opportunity for the Welsh Government to put Labour’s promises on ending exploitative zero hours contracts into action, but instead they voted with the Conservatives to block the amendment.

Ending the rise of zero hours contracts will not solve the growing problem of in-work poverty in the UK, but it will protect a significant number of workers who find themselves trapped in low paid work that leaves them struggling to afford basic living costs. Zero hours contracts are unfair and unethical and we must take action to stop their spread.

Jocelyn Davies is Assembly Member for South Wales East.

5 thoughts on “The growing problem of in-work poverty

  1. It is clearly important that people who go out to work should receive the ‘proper’ reward,however we live in a market driven economy and virtually everyone is seeking the ‘lowest’ price for goods and services so this affects the ‘supply’ side of the economy. When you add in the ‘globalization’ process which opens markets to foreign competition which at lower end of market is almost totally on price then the affect on ‘local’ wages cannot be ignored.It is part of PC’s ‘pitch’ to blame bankers for the crash in 2008/09,however the responsibility rests with governments that supervised the financial services industry throughout the western world. I would suggest that Jocelyn Davies reads the recent book on RBS which fully explained the collapse of that bank.It was the acquisition of a Dutch bank which caused the ultimate collapse of RBS!!.It should be noted that it was Lehman Brothers the American bank that started the collapse and the ‘socialist’,i.e Mr. Gordon Brown who as Chancellor of the Exchequer opened their new office in London on the 5/4/2004. The income from the City of London funded the excess of spending by New Labour and for which we benefited, but are now suffering by cuts in public spending to try and balance the books. In conclusion I have no problem with paying higher taxes to fund better wages/salaries for people in low paid employment,however politicians must be honest in that the increased costs will eventually have to be paid for out of taxes in various guises.

  2. Low pay, limited employee rights (for example, to sickness pay), and zero hours contracts, make people into a servant class working for demanding employers. While other well-paid and rewarded employees enjoy good standards of living, able to afford the costs of living, and so to participate in society, and with property values able to be maintained, there must be some financial room for manoeuvre so that the wealth is shared.

    It isn’t enough to improve citizens access to democracy and government via online petitions direct to Parliament, while many of them struggle to afford good quality shoes and boots for their children. In fact, there is something abhorrent about this!

  3. “It is part of PC’s ‘pitch’ to blame
    bankers for the crash in 2008/09,however the
    responsibility rests with governments that
    supervised the financial services industry
    throughout the western world.”

    So the heroic bankers/masters of the universe were merely drunk driving up the wrong lane of the motorway at 179mph and it was the police’s fault they didn’t wave them down? Yes all governments were abjectly complicite, what else is neo-liberalism for – but C’mon!

    Some people just don’t get it – until the next time. As for books on the Bankocracy, read Martin Wolf’s (FT) recent opus. And he is not exactly the Socialist Worker.

  4. Never thought I’ll find some synergy with a Plaid Cymru politician but Jocelyn has made some highly pertinent, relevant and valid points that need support across the National and the Welsh political world.

    UK needs Social Justice and robust legislative provisions to protect increasing growth of people on the margins of our society which includes most people in low paid jobs.

    No society can justify parallel life and privileges for the few and in the Welsh context this sentiment applies equally to poverty as to some other issues that Welsh politicians are pursuing at present.

    If we want to eliminate the poverty then the only way out is to find money through increasing taxation thresholds – Can’t see any political party openly advocating this solution!!??

    In my view, our political establishment of all colours would rather do nothing and the only catalyst which could wake them up would be a nation wide strife and unrest. Do we want this to happen or do we take steps now to build a better and a fair society?

  5. The fact that we are seeing a dramatic rise in the use of food banks not just among the unemployed but also those in work shows the Conservative view that Dickens was not writing a social critique of Victorian England but offering a vision of how society should be; the grateful poor tipping their hat to the ever so generous men of wealth for bothering to consider their plight.

    There is one point I wish to raise about zero hours contracts and their legality. In the field of contract law, a contract is comprised of four elements: offer, acceptance, consideration and an agreement that it is legally enforceable. In the case of consideration, no money is paid unless the employee performs their duties. One element of a zero-hour contract is an agreement to be available for work, and in some cases, not working for another employer. But given that no consideration (financial remuneration) is given for this, how is it enforceable or indeed lawful?

    The second point is that employees are increasingly vulnerable to exploitation and abuse by employers who know that they can do nothing about it. Mike Hedges suggests that there need to be stronger trade unions in the workplace. Another suggestion is a change in employment law to protect the vulnerable. The introduction by the Con-Lib coalition of increased fees for taking cases to employment tribunal has of course been designed to discourage this.

    If the left in Wales are serious about reversing this trend, then the simplest thing to do is to campaign for the National Assembly to have responsibility for employment law. Already, the Assembly has secured the legal right to have an Agricultural Workers’ Board to set wage levels. It’s now time to widen this agenda to the wider workforce. With Labour as the party of the workers (apparently) and Plaid Cymru opposed to current employment practices, the question is what is holding them back.

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