Public sector workers in London more likely to be in poverty than in other parts of the UK

Nearly 140,000 Londoners that live in a household relying on a public sector wage are in poverty, a think-tank says today.

The Social Market Foundation – a cross-party think-tank – has revealed today that nearly 1 in 10 (9.7%) London ‘public sector households’ (i.e. where at least one person works in the public sector) are in poverty, compared to just 1 in 13 (7.4%) across the rest of the UK.

There are approximately 1.4 million people in London living in households where someone is employed in the public sector. After accounting for housing costs, about 140,000 of them are in poverty.

The SMF said that the Government’s failure to pay people well enough to keep their families out of poverty undermines its efforts to provide better-paid jobs throughout the country, and its claims that work is the best route out of poverty, the SMF warns.

As part of the research, the SMF spoke to London-based public sector employees and outsourced workers delivering public services. While pay was the main issue raised by interviewees, their difficulties were made worse by short and uncertain working hours (exemplified by the phenomenon of the ‘one-hour contract’).

Whilst several workers said they remained committed to working in the public sector because they “want to help people”, a considerable number were looking to move to higher-paying private sector jobs as soon as they could, as public sector pay was “not bearable”.

As of March 2022, with the cost-of-living crisis taking its toll, more than 80% of jobs in the wider economy paid more than the average care worker wage. In 2018, 47% of care workers were earning below the real living wage (See notes), compared to just 22% in the wider economy.

From London-based public sector workers, that SMF spoke to as part of the research:

“The income is the main thing, let’s not kid ourselves. It’s not high enough. We’re severely underpaid.” – Charlie*, local authority housing management assistant

“In private care the pay there was fantastic. In the public sector, I’m on minimum wage. It’s not bearable.” – Kelly, adult care worker

“I don’t think that people are appreciated enough. You’ve got to look after those staff because they’re doing a really important role.” – Kim, healthcare assistant

* Names changed to maintain anonymity.

The SMF is working with Trust for London to establish an in-work poverty benchmark for London businesses that will encourage employers to do more to help their staff and tackle working poverty. This report was sponsored by Trust for London. The SMF retains full editorial independence.

Richard Hyde, Senior Researcher at Social Market Foundation, said:

“Public sector workers – the cleaners, porters, caretakers and administrative assistants and more – do vital work, and they do so with the motivation that they are helping people. But we cannot expect altruism alone to sustain and retain them.

“Whilst the Government is keen to show that work is the best route out of poverty, its own track record suggests otherwise. Being employed by the state is no guarantee of decent pay and secure and adequate employment.

In order to deliver on the promise of work getting more people out of poverty, the Government must lead by example and become a better employer. Whilst poverty is a complex phenomenon, we do know that avoiding low pay and having adequate hours of work and stable employment can go a long way to alleviating it”.

Klara Skrivankova, Director of Grants at Trust for London, said:

“This report shines a light on London’s problem with in-work poverty and low pay. Public sector workers carry out vital services that we all rely on – but thousands of Londoners working in the sector aren’t paid enough to meet the cost of living. The single most important thing employers can do to reduce poverty is pay a real living wage.

But it’s not just about pay-rates. London’s workers also deserve a minimum number of working hours, so that they know they will earn enough to get by each month, and a decent notice of shifts.”