Poverty and ethnicity: what are the links?

Why are disproportionate numbers of people from ethnic minority groups stuck in low-paid jobs? Helen Barnard of the Joseph Rowntree Foundation says specific policy initiatives are needed to address the issue.

Picture credit: Nick Hensman

Levels of poverty vary greatly between different ethnic groups in the UK. More than 40 per cent of Bangladeshi and Pakistani children are growing up in poverty, compared to 31 per cent of Chinese, 22 per cent of Black Caribbeans and 15 per cent of children in the white majority population.

So over the last few years the Joseph Rowntree Foundation has funded research into the links between poverty and ethnicity. Our goal is to learn more about how poverty can be reduced for people across all ethnicities in the UK.

JRF Poverty-Ethnicity child poverty before housing costs

However, we know from other research that living in poverty is more damaging when it lasts for longer – persistent poverty has worse impacts on health, well-being and future prospects than short spells. Our research shows that there is much more persistent poverty for people from Black African and Pakistani backgrounds than for those from other ethnic groups.

JRF Poverty-Ethnicity persistent poverty

Our annual Monitoring Poverty and Social Exclusion research has shown that across the UK most people in poverty live in a household where someone works. Research from the first phase of our poverty and ethnicity programme highlighted the problem of low paid and insecure work.

Low pay

People from some ethnic groups are disproportionately concentrated in poor quality work. For example; 28 per cent of Bangladeshi and 25 per cent of Chinese people work in the accommodation and food services sector. Almost half of Pakistani and Bangladeshi workers earn less than £7 per hour.

Between 1993 and 2008 the gap in pay between people from ‘white’ groups and those from ‘non-white’ ethnic minorities rose from 18 pence to 43 pence per hour. Our research showed that differences in employment and earnings between groups were not explained by education.

We examined some of the actions that employers can take to help low-paid workers improve their pay and security. These include giving managers targets to develop low-paid workers, developing ‘career ladders’ linked to training and development and spending more on training for the next job instead of the current one. These steps would help to tackle the poor work experiences of people across different ethnicities – as long as there is good monitoring of who actually benefits.

Our more recent research examined the role of low pay in more detail. It found that the chances of being paid below the living wage vary considerably by ethnicity and also gender. More than 30 per cent of women from the white majority, Pakistani and Bangladeshi groups are paid less than the living wage. Over a third of Pakistani men and over half of Bangladeshi men are paid below the living wage.

JRF Poverty-Ethnicity employees below living wage

A question which has often been asked in this field is whether the main driver of wage inequality between ethnic groups is that people from some groups are low paid compared to others doing similar jobs, or whether people from different ethnic groups tend to go into different kinds of jobs. Our most recent research finds that the biggest driver of wage inequality is that people from some ethnic groups are disproportionately likely to go into low paid occupations.

JRF Poverty-Ethnicity pc em in lowest paid

This points towards the importance of providing good quality careers advice to help young people and adults choose jobs which give them good prospects for better pay and promotion. It also shows that we have work to do to open up better paid occupations to people from groups who do not currently have access to them. However, the research also showed that people from some ethnic minority groups were more likely to be low paid no matter what occupation they were in.

Improving skills and qualifications is, of course, an important part of reducing poverty. However, our research shows that it is not enough on its own. Nearly a quarter of all graduates are now over-qualified for their jobs, with more being over-qualified in every ethnic minority group compared to the White British majority, rising to 40 per cent of Black African graduates.

JRF Poverty-Ethnicity overqualified graduates

Our research shows that where people live makes a difference to their employment opportunities, but that this varies for people from different ethnic groups. Unemployment rates for each ethnic group vary around the country, as do the types of jobs that people go into. For example:

  • People from the Indian group are most likely to be unemployed in Hackney or Wolverhampton (11 per cent) and less likely in Cambridge and Hertsmere (four per cent).
  • 25 per cent of people from the African group are unemployed in Birmingham, compared to 9 per cent in Reading.
  • People in the Chinese group are most likely to be unemployed in Haringey and Waltham Forest (10 per cent) and less likely in the City of London and Warwick (three per cent.)

Finally, we have published projections for employment in 2022. This shows that the long term trend of polarisation is set to continue: there are projected to be 2.34 million more highly paid and 0.52 million more low paid jobs by 2022, with 1.01 million fewer intermediate jobs.

These jobs are not evenly distributed across the country or between ethnic groups or men and women. In London, most groups of men and women are likely to see increases in highly paid jobs. However, in the rest of England, all groups of men and most groups of women are set to see either an increase in low paid jobs or in polarisation, with more high and low paid jobs and fewer intermediate ones.

This shows it is unlikely that trends in the labour market by themselves will reduce wage inequality or in work poverty: we need specific actions to improve the quality of jobs and improve access to them among groups stuck in low pay.

JRF research on poverty and ethnicity is available at http://www.jrf.org.uk/topic/poverty-and-ethnicity.