"The latest figures show that 60% of people living in poverty are working,while some 6.4 million people in the UK are underemployed and cannot find the work they want." (Joseph Rowntree Foundation 2012)
Where to start with this. I have always had a problem with the definition of poverty in these statistics. I think it distorts policy decisions as Ministers chase targets, which are now statutory obligations. Poverty is defined as having household income less than 60% of the median household income.
First of all that makes the definition of "poverty" relative not absolute. That is an important distinction to make since most people would consider poverty to be not having sufficient money to feed and support a family. It also means that "poverty" has increased over the decades as society has become richer but income distribution has grown. As an extreme example (I always think extreme examples demonstrate logical flaws), the medieval period had the vast majority of people with very little or nothing and a few who had a lot. Using the current definition the poverty rate would have been almost zero. Moving forward, the 50s and 60s would have had a much lower poverty rate based on the current definition. Given the material advances over the last 50 years can we really justify that measurement?
My next problem is that it is never broken down by region. That doesn't matter so much for determining the median income but it does matter for each individual household. A North-East household may well be below 60% of the national median income level but could be well above the regional median level. This is a wider problem with the poverty/inequality debate as inequality of income is totally irrelevant; what matters is inequality of consumption. It is the purchasing power of that income that drives inequality, which is why someone on one quarter of my salary can buy a four bedroom house in the North East and I can only buy a two bedroom flat in London.
Finally, relative poverty measures usually improve during a recession because median household income declines. You can see this in the link that Barna provided as 3 of the four measures of "poverty" have declined in the last 10 years. On that basis, the best way to improve the poverty measure would actually be to tank the economy or hammer the middle class in order to reduce the median household income. That would obviously be nuts.
So what is the point of this? The point is that the "poverty" measure isn't really any such thing. It exists as a measure, but not necessarily a good one. The best way to improve living standards is, and always has been, work. The undermeployment point I will deal with below.
Basically work isn't paying.
This may well be true, but that is entirely independent from the increase in benefits. The point remains valid about disincentivising work if benefits increase faster than wages.
Why is work not paying? Well, quite a lot of it is to do with the cost of employment and tax in particular. The other factor is the cost of living, which is hammering everyone at the moment. This is also the principle driver of the underemployment figure you mentioned earlier.
As I discussed earlier, there are not a finite number of jobs in an economy and when they are full everyone else has to queue outside. Employment is a simple assessment of whether the value added exceeds the cost of employment.
The value added is depressed at the moment because aggregate demand has been reduced (we can argue about whether this is temporary or permanent) so employment falls if the cost of employment stays the same. What this government and the last have done is to increase the cost of employment (the NI rise, additional regulation and employment rights). Employment has only remained stable because workers are prepared to reduce their hours (and effectively share jobs) to avoid full redundancy. The unemployment figures are therefore nothing to do with the government at all.
So with very little opportunity for sustainable employment along with decreasing social support and reduced access to housing ,"millions of people will almost certainly find themselves excluded from the mainstream and effectively placed outside the social contract that binds us all together."
I'm not quite sure what the quote from the vicar actually means. The social contract has been bust for years. The entire welfare state is virtually unaffordable now with the ticking demographic time bomb facing this country. In twenty years the state pension will almost certainly have to be means tested and taxes will have to increase further without radical action. No one is going to take that action or even acknowledge the problem though.
What GO started last week was an attempt to change the social contract that's been in force ever since the 1942 Beveridge report's proposals were implemented after WW2.
I've never read the Beveridge Report but I suspect it didn't set out a plan to have 13% of the woeking age population being dependent on the state during the biggest boom of the post war era. It was supposed to be a safety net and not a way of life.
