Making work pay in 2018

The UK is currently experiencing the worst decade of wage stagnation since the Napoleonic era. One in five workers now live in poverty, and the most dramatic rise in poverty has occurred in households where people are in work. The drivers behind this increase are well-documented: significant hikes in living costs (notably housing, childcare and transport), stagnant wages, and cuts to working age benefits as part of fiscal consolidation have all contributed to making workers poorer. Additionally, shifts in the labour market towards high risk, low remuneration work – the gig economy now employs as many people as the public sector – have created extra insecurity for those on the lowest incomes.

Low pay is not just a growing problem for the UK but a persistent one: 

just one in six workers escape low pay over a 10-year period.

In the absence of meaningful interventions, low pay signifies a long-term trap for the poorest in our society.

There is no silver bullet to solve the problem of low pay. There is clearly a role for macro level intervention, and the government still has mechanisms at its disposal, including restoring cuts to tax credits and Universal Credit work allowances, ensuring the National Minimum/Living Wage keeps pace with inflation, and measures aimed at improving job design in the vein of The Taylor Review – but these interventions can only go so far. There is also a role for charities and trusts, working locally, to respond to the immediate need in their communities. 

In 2015, Trust for London and the Walcot Foundation did just this: they began funding a 3-year, pan-London, in-work progression pilot called Step Up which trialed different approaches to tackling in-work poverty, with a view to shaping future programmes and policy in this area. You can read about the Step Up project at length in the latest report from the Learning & Work Institute, but if you only have 5 minutes to spare here are some practical tips for approaching in-work progression.

Top tips for delivering in-work support

Tip 1: Tap into support that is already out there and work collaboratively

Step Up was one of the first initiatives in the UK to trial in-work progression as a form of employment support. Being the new kid on the block had its disadvantages ... It proved difficult to engage the intended target audience for in-work progression because this group both lacked awareness of this type of support and already had many calls on their time including work and care responsibilities. A turning point for client engagement came with the decision to target clients where they were already accessing support. People in low paid work face various related barriers including debt, housing insecurity, food poverty, and poor physical and mental health, and through establishing strong relationships with organisations delivering support in these areas, we were able to locate individuals who would benefit from support. An additional benefit of working collaboratively with external organisations was that Step Up had good quality signposting and referral options, which allowed a holistic support package to be put in place for our most vulnerable clients.

Tip 2: Build on your existing basic skills programmes but be prepared to deliver more flexibly

It soon became apparent in our service delivery that in-work clients shared many of the same barriers as clients on pre-employment programmes, including low levels of basic skills (literacy, maths and digital). Particularly notable was the absence of digital skills with approx. 70% of Step Up clients in Year 1 either lacking the means or skills to independently access the internet. This significantly harmed their prospects of finding work and completing good quality applications. Consequently, there was a clear need to establish a strong skills base for this in-work cohort. We did not need to reinvent the wheel for this: instead we built on our existing into-work skills programmes including workshops, accredited training and specialist mentoring. The key difference was to ensure these programmes and resources could be accessed flexibly/out-of-hours as clients were often only available on evenings and weekends. Note: a consequence of working with a time-strapped cohort is that it often takes more time to deliver outcomes than on pre-employment programmes. The absence of ‘quick wins’ must be considered when commissioning in-work support because multi-year funding is required to deliver a genuinely transformative skills programme, which can deliver sustainable outcomes and build real resilience.

Tip 3: A living wage is a good starting point, but consider softer outcomes

A guiding aspiration of Step Up was to progress clients into jobs that paid the London Living Wage (currently £10.20 per hour). The Living Wage is calculated annually by the Resolution Foundation according to the best available evidence about living standards and is held as a valuable benchmark because it reflects what individuals need to meaningfully participate in society. However, earning a living wage was not always the main aspiration of clients: a job closer to home with little or no commute or a job with fewer hours that allowed for caring responsibilities often trumped the desire for better pay. If in-work support is to be client-led, providers and commissioners should consider the importance of softer outcomes as part of progression.

Tip 4: Understanding risk and supporting change

No matter who you are, starting a new job is scary. This is especially true if your welfare benefits might be affected. While the government’s flagship reform of the welfare system, Universal Credit, was rolled out with the stated aim of ‘making work pay’, the initial 5- to 6-week (minimum) wait for new claims has created additional risk for those on the lowest incomes who are looking to take on new work. Having transitional support in place for Step Up clients during this period, including food bank vouchers and budgeting support, was imperative to help them manage the risk of moving into new work.

Alessy Beaver works for the homeless charity Thames Reach, which supports Londoners to achieve ‘fulfilling lives, supportive relationships and decent homes’. She has coordinated the Step Up project for the past 18 months as part of Thames Reach’s homelessness prevention strategy. Thames Reach is one of six organisations delivering the Step Up project. Find out more here.