The potential role quality part-time work could play in reducing poverty and solving the inactivity crisis
Vacancy numbers are currently at a near-record high level of around 1.2 million on average per month, more than the number of unemployed people. We are also experiencing a participation crisis, with more than a million fewer people in the labour force currently than on pre-pandemic trends, largely explained by higher economic inactivity particularly amongst older people and those with long-term health conditions. In November’s jobs figures, economic inactivity due to long-term ill health rose above 2.5 million for the first time on record. Employment gaps are also widening for disabled and older people, reversing pre-pandemic trends. This labour market tightness is contributing to low growth, with labour and skills shortages constraining production and productivity, and high inflation through a classic wage-price spiral.
There is thus a need to support those that have remained outside of the labour market since the start of the pandemic that want to return to do so. Policy changes (including extending access to employment support and services to those out of work who want help to prepare for and get into work, not just for benefit claimants) are one part of the puzzle; but employers must also appreciate that flexible working arrangements, including part-time employment, are a necessary requirement for some individuals to be able to manage their life circumstances alongside re-entering the labour market. Additionally, the cost-of-living crisis, particularly the rising cost of travel, means that flexibility needs to be accompanied by sufficient pay to cover the additional costs associated with working. ‘Quality’ part-time jobs could offer both the flexibility and incentives necessary to improve labour market participation and combat the crises we are facing.
IES recently performed research for a Timewise report for the Joseph Rowntree Foundation that analysed the demand for part-time employment, the supply of individuals with the skills necessary to acquire a quality part-time job, and the potential impacts of these jobs on poverty rates and benefit claims. The analysis was focussed on three population groups that can arguably benefit most from flexible working arrangements such as part-time employment — parents, disabled individuals and older workers.
A quality part-time job is defined as paying £11.17 per hour (defined in terms of pay for simplicity’s sake — there is far more to quality employment than just this however), equivalent to £20,329 a year FTE. This is calculated by using the minimum income standards, a series of reports that produce budgets for different household types based on what members of the public think is needed for a minimum acceptable standard of living in the UK, and the Labour Force Survey (LFS) to construct a weighted average of the minimum income levels required for our groups of interest.
By looking at current pay rates by qualification levels, we determine that individuals with NQF level 2 (GCSE grades 9–4) and above qualifications can expect to earn above this pay threshold i.e., are sufficiently qualified for a quality part-time job. Based on this, we estimate that there are 521,000 sufficiently qualified individuals within our population of interest that are either workless seeking part-time work or part-time employed below the £11.17 per hour threshold not seeking full-time employment i.e., the potential demand for quality part-time work that is as of yet being unmet.
So, how many households could be moved out of poverty through quality part-time employment? Defining the poverty threshold using the households below average income data, we use the Family Resources Survey (FRS) and identify households in poverty which contain at least one sufficiently qualified adult within our groups of interest. Using a range of assumptions, we simulate the effect of a quality part-time job and find that poverty amongst workless single parent households falls from 70% to 10%, and from over 55% to under 10% for households containing a disabled individual and where at least one adult is workless.
Finally, we looked at the reduction in benefits claims resulting from an individual gaining a quality part-time job. We developed 24 different family type scenarios using data from the FRS which we entered into the entitledto benefits calculator, and then looked at the amount of benefits the household receives at baseline and then after simulating an adult in the family acquiring a quality part-time job. For an unemployed older person in a couple whose partner is also unemployed, the total amount of benefits claimed falls from around £160 per week to under £5 per week as a result of quality part-time employment. In 6 of the 24 family type scenarios, the family is moved off of benefits altogether.
Quality part-time work could thus represent a channel to connect those who have remained outside of the labour market since the start of the pandemic with employers who are looking to fill their record numbers of vacancies whilst also drastically improving the living standards of those able to find such work. This will help to combat the participation crisis we are facing which will in turn stimulate growth and bring down inflation. There are savings of at least £2 billion from underspends on policies to address the unemployment crisis that never came, that could be put to use to support groups including parents, older workers and the disabled to re-enter the labour market should the want to. Employers need to increase their offering of flexible working arrangements, alongside sufficient pay, that individuals require to return to economic activity.
For more information, see the full report, available here.
Any views expressed are those of the author and not necessarily those of the Institute as a whole.