How can employers help solve in-work poverty?

Too many working families are being swept up in a turbulent tide of high housing costs, low-paid insecure jobs and a social security system that no longer provides enough support to help them stay afloat in hard times.

Whilst the government has increased the hourly National Living Wage, for many households this welcome increase has been wiped out by the freeze on in-work benefits (such as tax credits and more recently Universal Credit) introduced in 2010.  

This has particularly affected working households with children. 5 out of 6 low-paid workers fail to escape low pay after 10 years. Many employees would like more hours whilst others are restricted in the hours they can work by caring responsibilities. 

When this is combined with high housing costs, especially in the private rented sector, it can leave working families facing impossible options of whether to heat their home or put food on the table. 

What does it mean to be living in working poverty? 
Perhaps an employee has used a food bank that week or is struggling with debt. They may be worried about how they are going to afford their children’s latest school trip or cope with a higher utility bill. 

They might have to struggle with the costs of public transport to reach work on time or the cost of childcare so that they can come to work.

The worry over financial problems can affect every aspect of a person’s life - including performance at work. However, employees, unsurprisingly, are unlikely to share their concerns with managers or colleagues.  

Employers must be part of the solution to in-work poverty: it can’t just be left to the government and individuals to solve.

We need an economy that generates good jobs with progression, training, secure and stable contracts and a good reward package. Some businesses need to ask themselves how sustainable it is to run on high levels of employee turnover and absenteeism, poor employee morale and often poor customer/client satisfaction.

Investors are also increasingly asking questions about workforce issues. We need to hit the sweet spot of the social and business case for improving work. This is especially true of the traditionally low paid sectors in the everyday economy such as retail, hospitality, social care and facilities management where millions of low paid workers work. 

Business in the Community, have been working directly with their members to develop case studies and a Good Work for All plan which sets out how employers are putting good work principles into practice. 

How can reward packages be used to help reduce in-work poverty?
It is vital employers prioritise improving pay at the lower end of their pay spectrum. For example, over 5000 employers (including a third of the FTSE 100) are signed up to the higher real Living Wage. 

HR strategies need to focus on progression of the lowest paid to higher paid roles and address the investment gap in training so lower paid staff can boost their skills. 

Employers are also well-placed to develop better progression opportunities for part-time staff. Some retailers, like Pets at Home, are leading the way in improving job design to improve progression for these employees.  

Stability and security of hours are important too: employees should have a contract which reflects the hours that they work. 

Employee fringe benefits are important and are valued by employees, however they can’t be a replacement for or traded off against the core parts of a reward package such as pay and security. 

At the Joseph Rowntree Foundation we supported a new study by the Work Foundation which explores ways of improving fringe benefit schemes for low earners and is essential reading for reward leaders. Despite rapid expansion of the employee benefits market, many employers are failing to maximise their value for low earners. 

The research shows that low earners really value employee benefits which support them to cover their highest living costs such as food, travel and housing. 

Employee benefits systems work best when they address these costs head on. This could take the form of discounts on food from stores that their lowest earners can afford; season ticket loans for buses as well as trains and access to low cost, low risk financial products. 

There are many examples out there of businesses making a difference through their employee benefit schemes. Increasing uptake of employee benefits is important too and there is a win-win when this can be done in conjunction with employees improving digital skills: especially in roles that are not office-based. 

Reward professionals are in a great position to make those incremental or fundamental changes to business practice to right the wrong of in-work poverty. 

Employers have a key role to play in improving people’s living standards and by working together we can solve poverty.

Louise Woodruff is Policy & Partnerships Manager (Work) at the independent Joseph Rowntree Foundation. She tweets @jrflouise.