One in four children will live in poverty by 2020 as pay gap widens

One in four children will be living in poverty by 2020 as Britain’s pay gap widens, according to new research co-authored by ISER’s Professor of Economics, Mike Brewer, previously at the Institute for Fiscal Studies.

Published by the Joseph Rowntree Foundation, Poverty and Inequality in 2020: Impact of Changes in the Structure of Employment, looked at the increasing gap between households on high and low incomes and rising rates of poverty as a direct result of changes to the labour market and cuts to welfare spending.

Predicted changes to household incomes – with benefits tied to inflation, fewer middle wage jobs and Government cuts to overall welfare spending – will force many more families into financial hardship, according to the projections produced by the Institute of Employment Research at the University of Warwick and the IFS.

Professor Brewer explains

“In our new research, we found that projected changes in the mix of job types (where “job types” are defined by industry, occupation, skill level, gender, region, and full-time or part-time status) over this decade are likely to widen inequalities in household incomes further, and will consequently cause measures of relative poverty to rise further too. This is mostly due to the anticipated continuation of long-running labour market trends: for example, high-wage occupations are expected to continue to replace middle-wage occupations, but with little change in the prevalence of low-wage occupations in a so-called “hollowing out” of the labour market.”

“With relative child poverty projected to reach almost 26% in 2020-21 in our baseline scenario, there is no way that Universal Credit alone will get the Government back on track to hit its 2020 target of reducing this measure of poverty to just 10%.”

“This research adds to the evidence that policy-makers who want to reduce income inequalities in the coming years will have to swim against a rising tide of inequality-increasing changes in the mix of job types, and a less redistributive tax and benefit system. “

Labour market changes unlikely to reduce inequalities

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