A new report by Oxfam published today (Thu 14 June) highlights the "perfect storm" facing the poorest people in the UK.
The Perfect Storm shows how increasing unemployment, a lack of decent jobs, rising living costs, falling incomes and deep cuts to welfare and public services are hitting the most vulnerable.
The result is growing inequality. The report shows that:
- Between 1998/99 and 2008/09, the incomes of the richest 10th in the UK rose by 37%. The incomes of the poorest 10th fell by 12%
- Between 2011 and 2012, the earnings of cleaning staff fell on average by 3.4%, from £6,732 to £6,502. The earnings of Directors and Chief Executives increased on average by 37% from £97,569 to £112,157.
- Between 2007 and 2012 the National Minimum Wage went up by 12.1%. In the same period food prices increased by 30.5%
- If Jobseekers' Allowance had kept pace with earnings it would now be £123.69 a week. It is actually £65.45.
Judith Robertson, Head of Oxfam Scotland, said: "If things carry on like this, within 30 years we will reach levels of inequality last seen in the Victorian era. Inequality is bad for everyone. It is obviously bad for those in poverty, but it is also bad for economic growth.
"But, more than that, it is simply unacceptable. The UK is one of the richest countries on the planet. There is simply no justification for high levels of inequality and poverty. We need to see income being distributed much more fairly."
Work no longer a route out of poverty
Publication of The Perfect Storm, is timed to coincide with the release later today (Thu 14 June) of the Government's latest data on Households Below Average income for 2010/11. The figures are expected to reveal an increase in the number of working people in the UK living in poverty.
In 2009/10, some six in every 10 of the 7.9 million working-age adults in poverty were from working households. In Scotland more than 41% of people in poverty - some 870,000 people - were from working households.
Judith Robertson, said: "The evidence is clear - having a job is no longer necessarily enough to lift someone out of poverty.
"In Scotland this means that hundreds of thousands of people are working for employers who pay poverty wages that are subsidised from the public purse through tax credits and other benefits.
"The UK Government is justifying huge cuts to welfare support for people on low incomes by saying this will make work more attractive. But the truth is that there simply aren't enough decent jobs available.
Employment and jobs
The Perfect Storm shows that since the recession started, 830,000 permanent full-time jobs have been lost in the UK, and just 500,000 new part-time jobs created. The number of people in temporary work because they cannot find a permanent job has risen by 73 per cent.
In Scotland, figures from the STUC show that there is a full-time employment deficit of 489,508. This includes people who are unemployed, people who are economically inactive but who want a job and people who have permanent work, but who want to work more.
Judith Robertson said: "Earlier this year Oxfam published its Humankind Index for Scotland. It shows that people in Scotland want satisfying work. They're not interested in football players' salaries, they just want a secure and stable income. That's the kind of economy we should be working towards."
The Perfect Storm also criticises the UK Government's strategy to cut the national deficit for relying on £99 billlion of budget cuts and just £29 billion in increased taxes.
The report shows how these budget cuts impact most on the poorest and most vulnerable: the richest 10th in society will lose 1.5% of their incomes a year as a result of the cuts; the poorest 10th will lose 20.3% a year.
Oxfam is calling on the UK Government to reverse the cuts to working tax credits and to increase the minimum wage, which has fallen or been frozen in real terms in each of the last four years.
Oxfam Scotland is a supporter of the Scottish Living Wage campaign, which aims to ensure every worker earns more than £7.20 an hour, significantly more than the National Minimum Wage of £6.08.
The report makes a series of additional policy recommendations Oxfam believes could help mitigate the impact of the †erfect storm‹ These include:
- Protecting the safety net of the welfare system, by making sure no further cuts are introduced that disproportionately affect the poorest
- Reducing cuts to public services and increasing progressive taxation instead
- Protecting people living in poverty from high energy prices
- Introducing a maximum level of interest lenders can charge to protect people in debt
- Investing in universal childcare and affordable housing and extending the right to flexible working to all workers
How to pay for it
Oxfam believes the additional cost of these measures could be met through a crackdown on tax avoidance and evasion.
Judith Robertson said: "Tax avoidance and evasion costs the UK economy £35 billion a year. That money could help people who are struggling to get by and help us build a better society.
"This crisis could be an opportunity to change how we think about what a fair society looks like, and to build foundations for overcoming poverty once and for all."
The Perfect Storm is available to download here: http://policy-practice.oxfam.org.uk/publications/the-perfect-storm-economic-stagnation-the-rising-cost-of-living-public-spending-228591