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Failure to tackle in-work poverty will hinder economic growth, think tank warns government

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The Government needs to expand opportunities for 10 million workers struggling on less than 15,000 a year if it is to meet its targets for benefit savings and poverty reduction.


Employment think tank The Work Foundation argues that in-work poverty is a major hindrance to the UK’s economic performance. Its Welfare to What? Prospects and challenges for employment recovery report, published today, says that the bottom 10 million earners are most vulnerable to wage reductions and job insecurity.

"There is an urgent need for quality, lasting jobs that provide opportunities for development and progression," says lead report author Naomi Clayton.

"In places such as Blackpool, Grimsby and Hull, a third earn less than £7 an hour. Without more, better-paid jobs, long-term sustainable regeneration in these places will not be possible. In such depressed local labour markets, lack of labour demand creates and reinforces social problems, further reducing individuals’ chances of securing sustainable, quality employment."

The Work Foundation says policy makers need to address the deep-rooted structural problems in the labour market. Without this effort, the mismatch between new jobs and existing skills will leave people trapped in insecure, low wage employment or pushed out of the labour market altogether.

The situation will only worsen as jobs lost in the public sector fail to be replaced by a recovery in manual and semi-skilled jobs.

Clayton added that a wide range of measures, used in parallel with the National Minimum Wage and working tax credits, was required to combat in-work poverty.

The report also calls on the Government to ensure local authorities and their partners have the flexibility, including greater budgetary control, to shape labour market policy and customise interventions in a way that responds to local circumstances.