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The Work Foundation

Ten Million Being Left Behind

Authors: The Work Foundation Naomi Clayton

01 February 2011

Last week Mervyn King warned that the UK is likely to see the sharpest fall in real wages in 2011 since the 1920s. For the ten million workers in the UK earning less than £15,000 a year - many living at the edge of their means - rapidly rising food and energy prices make life increasingly difficult.

 As we emphasised in our latest report Welfare to What? published yesterday, the Coalition must focus on expanding the opportunities for the Bottom Ten Million if they are to make major inroads in poverty and worklessness.

The long 'tail' of low skill, low quality work in the UK means that, for many, a job does not provide the income needed to allow a minimum acceptable standard of living in the UK. All too often people are trapped in cycles between low quality jobs, with limited opportunity for progression and unemployment. And over the course of the recession it is low earners who were most vulnerable to job loss and pay reductions.

As the cuts in welfare spending bite, it is low paid workers again who will be amongst the hardest hit. Working tax credits potentially made it easier for low paid workers to accept reduced hours and smaller pay rises - with a freeze from April the relative impact on in-work poverty will be reduced.

Policy makers urgently need to consider a wider range of policy measures in parallel with tax credits and the national minimum wage in order to combat in-work poverty. The Growth Review set to inform the Budget in March needs to consider how the economy can provide opportunities for all. A key challenge here is how to improve the performance of low wage businesses.

Many of the jobs lost in the recession are unlikely to return in the recovery and the data shows early signs of a return to the hourglass reminiscent of the 1980s and early 1990s. Without further intervention - and more, better quality jobs - the Bottom Ten Million are at risk of being left further behind.

The Bottom Ten Million research programme will explore these challenges in greater depth over the next two years, looking at what priority measures need to be taken if all UK citizens are to share in the sources of growth and prosperity over the next decade.