Record numbers of working families in poverty due to low-paid jobs

Most taking up jobs are trapped on less than living wage, finds report by Joseph Rowntree Foundation

The report paints a picture of huge numbers trapped on low wages. Photograph: Christopher Thomond for the Guardian

Insecure, low-paid jobs are leaving record numbers of working families in poverty, with two-thirds of people who found work in the past year taking jobs for less than the living wage, according to the latest annual report from the Joseph Rowntree Foundation.

The research shows that over the last decade, increasing numbers of pensioners have become comfortable, but at the same time incomes among the worst-off have dropped almost 10% in real terms.

Painting a picture of huge numbers trapped on low wages, the foundation said during the decade only a fifth of low-paid workers managed to move to better paid jobs.

The living wage is calculated at £7.85 an hour nationally, or £9.15 in London – much higher than the legally enforceable £6.50 minimum wage.

As many people from working families are now in poverty as from workless ones, partly due to a vast increase in insecure work on zero-hours contracts, or in part-time or low-paid self-employment.

Nearly 1.4 million people are on the controversial contracts that do not guarantee minimum hours, most of them in catering, accommodation, retail and administrative jobs. Meanwhile, the self-employed earn on average 13% less than they did five years ago, the foundation said.

Average wages for men working full time have dropped from £13.90 to £12.90 an hour in real terms between 2008 and 2013 and for women from £10.80 to £10.30.

Poverty wages have been exacerbated by the number of people reliant on private rented accommodation and unable to get social housing, the report said. Evictions of tenants by private landlords outstrip mortgage repossessions and are the most common cause of homelessness.

The report noted that price rises for food, energy and transport have far outstripped the accepted CPI inflation of 30% in the last decade.

Julia Unwin, chief executive of the foundation, said the report showed a real change in UK society over a relatively short period of time. “We are concerned that the economic recovery we face will still have so many people living in poverty. It is a risk, waste and cost we cannot afford: we will never reach our full economic potential with so many people struggling to make ends meet.

“A comprehensive strategy is needed to tackle poverty in the UK. It must tackle the root causes of poverty, such as low pay and the high cost of essentials.”

Tom MacInnes of the New Policy Institute, which carried out the research, said: “This report highlights some good news on employment – but earnings and incomes are still lower than five years ago, and most people who moved from unemployment into work can only find a low-paid job.

“The government has focused its efforts on welfare reform, but tackling poverty needs a wider scope, covering the job market, the costs and security of housing and the quality of services for people on low incomes.”

The report shows 13% of pensioners are living in low-income households, compared with 21% of working-age adults and 27% of children. People are counted as being in poverty if their household income is less than 60% of the median income for UK households after housing costs – making £130 the weekly threshold for a single adult in 2013.

A government spokesman highlighted that the percentage of people in relative poverty was at its lowest level since the mid-1980s and the number of households where no one works was the lowest since records began: “The government’s long-term economic plan is working to deliver the fastest growing economy in the G7, putting more people into work than ever before, and reducing the deficit by more than a third.

“The only sustainable way to raise living standards is to keep working through the plan that is building a resilient economy and has enabled us to announce the first real-terms increase in the minimum wage since the great recession.”