Employment and poverty

Mike Hedges MS

For many people life is very difficult with the necessities such as food and energy costs increasing rapidly and wages not keeping up with the increased costs and often varying on a weekly basis. Too many of the people living in Wales are employed on “flexible” or exploitative contracts with no guaranteed weekly income but income based on variable hours and the government set minimum wage.

Zero hours contracts are not the only “flexible” employment practice used by employers. Other “flexible” employment practices include short, guaranteed hours, split shifts, annualised hours and using agency staff. As well as the traditional short term and temporary contracts there has been a growth in the number of these “new employment” practices.

Increasing numbers of companies are taking on staff on ‘zero-hours’ contracts with no guaranteed hours or times of work. Zero-hours contracts provides employers with a pool of people who are ‘on-call ‘and thus puts all the financial risk on to the employee whose income is not guaranteed.

A variation on zero-hour contracts is where there is a guarantee of as little as one hour a day and when people arrive at work, they then discover how long the shift is going to be. Starting at 8:00 am you may finish at 9:00 am or work until late in the evening depending on workload and the number of people who are available that day. This is a highly disruptive work pattern because you are unable to make plans for any part of the day until the day itself and wages vary from week to week.

Both zero hour and short weekly or daily guaranteed hours means that there is no certainty of income on a weekly or monthly basis. This leads to severe financial problems when few or no hours are worked in any week(s) which can be due to shortage of work, sickness or not being in favour with the person deciding who to use for how many hours each week.

Using staff employed via an agency means most employment responsibilities are then with the agency. Crucially however agency workers are not entitled to benefits, such as occupational sick pay, redundancy pay and the right to claim for unfair dismissal, and minimum notice of redundancy where they are working. This means that agency staff are much easier to dismiss than directly employed staff because they are employed by the agency not the company they are working at.

The renaming of the minimum wage as the living wage has obviously caused some confusion as there was already a national living wage calculated by the living wage foundation. I believe that the case for everyone to be paid at least the real living wage as defined by the living wage foundation is overwhelming. I don’t believe that it makes sense that the government enforces a minimum wage that is not considered enough to live on.

I also think it really is important that we think about people who are in debt and those who cannot meet their basic needs of food, heating, and a home. Food and energy prices are rising rapidly and causing problems for people on low incomes. Food banks have become a necessity and are the soup kitchens of the 21st century.

Households will face a record energy bill increase of 54% from April 2022 after the regulator lifted the cap on default tariffs to £1,971. The energy regulator lifted the maximum rate that suppliers can charge for an average dual-fuel energy tariff by £693, to reflect the fourfold increase in energy market prices over the last year. Many people on low income use a token meter so when they run out of tokens or money for tokens, they lose their energy supply which means no heat, light, or cooking.

Anti-poverty campaigner and author Jack Monroe explained why inflation does not translate well to the changes in the price of food. While inflation is up to 5.5% at the start of this year, Monroe’s price tracking demonstrated the cost of some staple foods have increased as much as three-fold in the same time.

As the pressure of increased prices for food and energy come in there is always the looming threat of debt and having to repay it.

Many are in debt because they’re poor. Debt is not caused by irresponsible expenditure; it’s not caused by a lack of financial literacy; it is caused by a lack of money. It’s caused by bills coming in and the inability to pay them. The biggest problem that can face anybody is an unexpected death in the family where all members of the family have to collect money and borrow money in whatever way they can, to have a basic funeral.

Whilst debt can be caused as stated above by a family member dying and a funeral to be paid for, it can also be caused by an unexpected bill such as an oven breaking or a bed needing replacing because the springs have gone.

In the 1990s, the way out of poverty and debt was to get employment. Many people living in poverty now, who are building up debt, have one or two family members in work and still have debt and the inability to pay for basics. What poverty means is people going hungry, houses not adequately heated and children going without things that many take for granted. At Christmas as many prepare for the festivities, there are families where there’ll be few, if any, presents for the children, and no special food for Christmas. I like many others collect and donate food for the local food banks and donate to the Mr X appeal, which provides children who otherwise would not have a present at Christmas with a Christmas present.

All this has been made worse by the cruel cut in universal credit, which has made matters so much worse for many people taking the ‘just managing’ into ‘not managing’.

The problem we have of fire-and-rehire on poorer terms and conditions just makes matters worse. We need to get people out of poverty, but only higher wages, guaranteed hours and full-time jobs are going to get people out of this poverty and debt cycle.

Mike Hedges is the Senedd Member for Swansea East