Over the last four months, the London Good Work Commission has been investigating poverty and bad work across the capital. This is part of its bigger goal of examining how we create a city of good work for all by 2030.
Established by London Plus, the hub body for the capital’s 120,00 voluntary organisations, the commission has pulled together a compelling amount of evidence about the state of poverty and bad work in the city. This has involved several site visits and community roundtables, an extensive literature review, and interviews with charity leaders, frontline professionals and other experts.
We have just published our interim findings, which show a London shamed by vast and chronic levels of poverty. In fact, we have the highest levels in the country, with 28% of people (2.4 million), currently languishing in poverty (after accounting for housing costs). That figure shockingly includes 700,000 children.
A constant refrain we have heard in our community evidence sessions, is the “dire cost of living in the capital” and “how grossly unaffordable the city has become”. Rough-sleeping has now hit a record high, with 8,855 people recorded as sleeping on the streets last year. That is an 18% year-on-year rise in 2018-19 and two and half times levels recorded in 2009-10 (3,673).
The human tragedy of poverty isn’t just limited to a lack of income though. During the course of our research, the commission has heard desperate accounts of people being “forced to live on just bread, butter and water for a year”, children not eating outside of school hours, and in one instance, an individual resorting to “eating cigarette butts just to survive”. The levels of food hunger are now so dire now that parents and even teachers, regularly forgo meals to ensure their kids can eat. In the last year alone, the capital handed out 166,512 emergency food parcels.
The causes of poverty are well known and often multidimensional. And there are several issues unique to London, which have helped to create the grave poverty crisis we see today. But perhaps the most alarming feature of our city’s poverty crisis is that having a job is increasingly proving to be no means of escape. In fact, for many Londoners, work has become the principal source of impoverishment in their lives.
Just look at the explosion of poverty pay across the capital. Despite official figures showing near record high levels of employment and very low numbers out of work, the capital has seen in-work poverty soar in the last two decades. The majority of people who are in poverty now come from a working household (58%). The proportion is up from 44% a decade ago and 28% two decades ago.
In our site visits and community roundtables, we heard countless stories of “how it’s simply not possible to survive, let alone live, on a minimum wage job in London”. And polling shows that only a third of those earning less than a real living wage are satisfied with their pay.
The government has committed to using the minimum wage to achieve the “ultimate objective of ending low pay in the UK”. If we use the international definition of low pay, that would mean a minimum wage worth two thirds of median earnings (66%). We are currently on course to reach 60% by 2020, which will equate to a minimum wage of around £8.60 an hour.
The Resolution Foundation think-tank has estimated that if economic conditions are broadly benign with a stable labour market, we could reach the two thirds threshold by the middle of the next decade. But this is a national target. In the case of London, the “bite” of this minimum wage would only be equivalent to 49% of hourly median earnings. In other words, under these government plans, we would still be nowhere near ending low pay in the capital several years from now.
The commission has also heard many accounts of individuals getting stuck in these poorly paid jobs with little scope for pay rises and advancement. Their stories reflect the findings of a recent Resolution Foundation study for the social mobility commission, which showed that just one in six (17%) of low paid workers managed to transition out of low pay between 2006 and 2016. With over a fifth of working Londoners paid below the real living wage, poverty pay has become a poverty trap.
The capital has also seen a large proliferation of insecure work, such as zero-hour or short-term contracts, and bogus self-employment. Figures show 260,000 workers are on a temporary contact, which is a record high. And new research from the Living Wage Foundation and New Economics Foundation has found 15% in London are in low paid (not real living wage), insecure work. That’s a staggering 807,430 Londoners in a population of almost nine million.
Throughout our community engagement, we repeatedly heard from people about their anxieties and frustrations about not having the necessary skills to succeed in a fast-changing jobs market. And the official statistics paint a worrying state of affairs. For instance, there are 400,000 Londoners who have no qualifications at all.
As we explained, a lack of work is a big problem for the city. But so is over-employment. Londoners work about three weeks more a year than the national average, with full-time workers clocking in an average of 38 hours a week.
London has also become a grossly unequal city. Some of these inequalities have become so large and entrenched that ours has become a “tale of two cities”. To illustrate this, the richest 10% of households in London received 29% of total income. This is more than the bottom half of households put together.
And figures released at the start of the year by CIPD and the High Pay Centre, show that the average FTSE 100 chief executive gets paid £3.9 million now, which marks an 11% increase year on year. That means in just three working days the UK’s top bosses will make more than an average full-time worker in the whole year.
Over the coming months, the commission will be developing a vision of how we can create a city of good work for all by 2030. Our final report and recommendations will be presented at a specially convened event during London Challenge Poverty Week in October 2019.
Rayhan Haque is the convener of the London Good Work Commission. Follow him on Twitter.