The UK is the world’s six largest economy, yet recent government statistics show that as many as 1 in 5 of the UK population live below our official ‘relative’ poverty line. But what is relative poverty?
Certainly, some would argue that only a number third world countries would understand the true nature of poverty. However, we at the WEU believe that it is wrong to believe that a citizen of a rich country like the UK cannot suffer the consequences of poverty.
Relative poverty is defined in terms of an individual’s income being significantly lower than that of the national average. In the UK, this would be when a household income is below 60 per cent of the contemporary average, with incomes measured before housing costs. In reality this level of subsistence can make life a daily slog, an often humiliating and degrading experience that can have far reaching implications for your physical and mental health. In short, living in a country where seemingly anything is possible can become a torturous prison for those without the means to enjoy it.
What are the causes of Relative Poverty in the UK?
1. Inequality in Wages and Earnings Growth.
Workers with high levels of skills and qualifications will be in demand and therefore will be able to gain higher wages. However those with low skills will find themselves in low paid jobs or even unemployed. In recent years wage differentials have increased due to:
i) De-industrialisation, leading to more service sector jobs which tend to be lower paid
ii) Public Sector jobs have had low increases in wages
iii) Growth in part time and temporary jobs which tend to be low paid
iv) Decline of trades unions leaving many workers unable to bargain for higher wages.
v) Increased demand for highly skilled workers
2. Falling Relative value of State Benefits.
Pensions and other benefits are index linked (this means rising in line with inflation) This tends to be less than wages which increase faster than inflation. Therefore those dependent on benefits will lag behind other members of society. An estimated 1.3 million pensioners are totally reliant on state pension.
3. Higher levels of Structural and Long term Unemployment.
Unemployment is the biggest cause of poverty in the UK because people rely only on benefits
4. Regressive Taxes.
Tax changes in the 1980s and 1990s have put a higher burden of tax on the poor. There has been a shift in taxation in recent years that has seen those on higher incomes contribute less in relative terms. However the overall tax burden has remained unchanged because increases to VAT (including the extension of VAT to domestic fuel) and other indirect taxes on alcohol and petrol. These taxes take a significantly higher % from those on low incomes.
This allows wealth inequality to be passed on, ensuring that those that ‘have’ and those that ‘have not’ remain as they are. This is particularly relevant in terms of the housing market.
The Workers of England will always campaign to put a stop to poverty, be it relative or absolute. In fact, only this weekend (1st & 2nd of March 2014) our campaign team were out and about in London, calling for the government to implement changes that will, at the very least, ease this unacceptable scenario that we see in England and the rest of the UK today. Causes such as the campaign for a living wage and a Parliament for England are directly linked to this, rest assured these will be at the heart of our campaigning for the foreseeable future.
Workers of England Union