Black workers, jobs and poverty

Black workers, jobs and poverty

Summary

This report uses official data to look at the links between the poverty of people from black and minority ethnic groups and the labour market discrimination and exclusion they face. We show that this is a serious problem and that things are improving - but still far too slowly.

• The facts reveal that black workers in Britain are more likely to be poor and unemployed than white people. Therefore black workers should be more likely to benefit from the Government’s flagship goal of ending child poverty by 2020.

• The Government believes that getting everyone capable of paid work into a job is the key to achieving its poverty goal. Unemployment currently stands at 11 per cent among black workers, compared to five per cent among whites. Therefore black workers clearly stand to gain most from the Government’s strategy.

• Like other groups black workers have seen an improvement in these figures since 1997. But the gaps between black and white workers are closing very slowly. Unless this changes black children will be the last to benefit.

Black and minority ethnic poverty

Black and minority ethnic people (BMEs) are, overall, poorer than white people. The table below uses Households Below Average Income data to show that, while there are differences between BME groups, they are all more likely to be poor than white people. In the social sciences there is some controversy about whether poverty should be measured before or after people’s housing costs have been taken into account. Table 1 shows the results using both definitions. The numbers are different, but the picture of higher poverty rates for all BME groups remains the same.

Table 1: Risk of being poor by ethnic group 2002/3 [1]

		Proportion who are poor
		(Measured before housing costs are taken into account)	(Measured after housing costs are taken into account)
White		16%	20%
Mixed		18%	31%
Asian or Asian British		37%	45%
	Indian	20%	22%
	Pakistani/Bangladeshi	59%	69%
Black or Black British		27%	38%
	Black Caribbean	24%	32%
	Black Non-Caribbean	30%	46%
Chinese or Other Ethnic Group		23%	32%
All individuals		17%	22%

The Government has set itself the objective of eliminating child poverty by 2020. These figures suggest that black and minority ethnic families should be more likely to benefit from this flagship policy. But the issue may well be complicated by the connections between government policy, poverty, employment and racial disadvantage.

Poverty, employment and the Government’s priorities

Everyone concerned about social justice should care about the fact that black and minority ethnic people are disproportionately likely to be poor. And trade unionists should be especially concerned, as this is a workplace issue. The Households Below Average Income report clearly shows that there is a link between poverty and paid work. If you have a job you are much less likely to be poor:

Table 2: Risk of being poor by e conomic status of adults in the family 2002/3 [2]

Status	Proportion who are poor
	(Before housing costs)	(After housing costs)
One or more full time self-employed	18%	21%
Single/couple all in full-time work	3%	4%
Couple, one full-time, one part-time work	3%	5%
Couple, one full-time work, one not working	12%	18%
No full-time, one or more part-time work	23%	30%
Workless, head or spouse aged 60 or over	24%	25%
Workless, head or spouse unemployed	64%	75%
Workless, other inactive	43%	64%
All individuals	17%	22%

People who live in ‘workless’ households (where no adult has got a job) are up to 20 times as likely to be poor as people who live in families where all the adults have got jobs.

That is why the government has made paid work the keystone of its anti-poverty strategy, and pays particular attention to the problem of ‘worklessness’. Alan Johnson MP, Department for Work and Pensions, said in his introduction to Opportunity and Security Throughout Life, the DWP’s five year plan: 'We know that work is the surest route out of poverty, and the best support that we can give to Britain’s children is to ensure their parents can find employment.' [3]

The latest edition of the DWP’s 'progress report', Opportunity for All, made plain the significance the government attaches to worklessness as an issue: 'Children in workless families are much more likely to be in low income than those in families with one or more adults in full-time work. Nearly half of all children in workless households live in low income, compared with around a quarter of children in households containing one or more workers. ' [4]

BMEs - employment, unemployment and worklessness

Five per cent of white people are unemployed, compared with 11 per cent of black and minority ethnic people. More than three quarters of working age white people have jobs, but for non-white people this proportion falls to between half and two-thirds.

A common reaction to this fact is to point out that there are different figures for different minority ethnic groups. This is true, however they are all worse than the white figures:

Table 3: UK working-age employment and unemployment rates by ethnic group, 2002/3 [5]

Ethnic group	All	White	All minority ethnic groups	Mixed	Indian	Pakistani	Bangladeshi	Black or Black British	Other
Employment rate	74%	76%	58%	60%	68%	45%	39%	60%	53%
Unemployment rate	5%	5%	11%	15%	7%	15%	17%	13%	12%

Another suggestion is that these figures reflect different levels of skills and qualifications. But, as the government’s Ethnic Minorities Employment Task Force has shown, for any given level of qualifications, a black or minority ethnic person will be less likely to be employed than a white person with the same qualifications. For instance, 81.4% of BMEs with degrees are employed, compared with 87.4% of white people. In fact, a white person whose highest qualification is GCSEs at grade A-C is substantially more likely to have a job than a black or minority ethnic person with A levels (the gap in employment rates is more than 10 per cent). [6]

Another response is to suggest that the employment gaps reflect the fact that many black and minority ethnic people were born abroad. The point being that things will inevitably improve for people born in the United Kingdom. Unfortunately, when we separate out the employment rates for white people born in the UK and those born elsewhere, and compare them with the rates for BMEs born in this country and born abroad, the gaps persist. In fact, white people born abroad have higher employment rates than BMEs born in the United Kingdom. And white people who are not UK nationals have higher employment rates than black and minority ethnic people who are.

Table 4: UK working-age employment rates by ethnic group, country of birth and nationality, 2002/3 [7]

All	White UK born	White not UK born	Non white UK born	Non white not UK born
74.0%	75.7%	72.0%	59.1%	56.4%
All	White UK national	White not UK national	Non white UK national	Non white not UK national
74.0%	75.7%	70.0%	59.7%	52.4%

BMEs are also more likely to be ‘economically inactive’. The main reasons for working age people to be unemployed, but not looking for a job, are that they have family responsibilities or are sick or disabled. Every white ethnic group has a lower economic inactivity rate than any non-white ethnic group. And white British people have lower rates than white Irish people and people classified as ‘other white’.

One response to this has been to concentrate on the very high economic inactivity rates for women from some minority ethnic groups. A fairer labour market policy should aim to provide extra help for the women concerned. But this should not deflect from the fact that non-white men have significantly higher inactivity rates than white men (by some 10 per cent) and non-white women have higher rates than white women:

Table 5: UK working-age inactivity rates by ethnic group and gender, 2002/3 [8]

Ethnic group	All	White	All non-white	Mixed	Indian	Bangladeshi/Pakistani	Black	Other
Men	16.6%	15.7%	25.9%	24.0%	20.3%	27.9%	24.8%	31.5%
Women	27.5%	25.9%	45.0%	34.7%	33.2%	70.7%	36.6%	46.5%

White employment rates are higher than the employment rates for BME groups and inactivity and unemployment rates are lower. Therefore it comes as no surprise that workless households are more common for most non-white minority ethnic groups:

Table 6: Risk of worklessness in working age households by ethnic origin, autumn 2004 [9]

		Worklessness rate
White		15.3%
Mixed		25.9%
Asian		19.6%
	Indian	11.9%
	Pakistani/Bangladeshi	28.8%
Black		28.0%
	Black Caribbean	22.1%
	Black African	35.2%
	Other Black	14.4%
Chinese		16.4%
Other Ethnic Group		30.7%
All individuals		16.0%

Black and minority ethnic people and anti-poverty policies

There is a great deal to welcome in the Government’s approach:

• As BME people are disproportionately likely to be poor it is good news that the current government - in contrast to governments before 1997 - has set itself the goal of abolishing child poverty.

• An authoritative independent assessment suggests that the government is about a quarter of the way to achieving its objective, with roughly a million children having been taken out of poverty since 1997. [10]

• As worklessness is a major cause of poverty and BME people tend to be excluded from the labour market it is also good news that the government aims to combat poverty by helping workless people to get jobs.

But this is only true if the government can deliver jobs equally for all ethnic groups. As non-white ethnic groups are a minority of about nine per cent in the UK population [11] an improvement in the average national employment and poverty figures would not necessarily mean that all groups had benefited.

Fortunately BME employment rates havebeen improving:

Table 7: Employment rates since 1997 [12]

	1997	1998	1999	2000	2001	2002	2003	2004
All	72.6%	73.2%	73.7%	74.4%	74.5%	74.3%	74.6%	74.7%
Ethnic minority people	54.8%	56.4%	56.9%	57.9%	57.7%	57.9%	57.8%	59.4%

But this is not enough by itself. Table 7 shows that the employment rate of BME people has been increasing, but this is against the background of a picture that has been improving for all groups. If the employment gap between white and black people stayed the same, while absolute employment levels rose, the result would be that black and minority ethnic children would be the last to benefit from the achievement of the government’s child poverty target. And they would suffer disproportionately to the extent that that target was not achieved.

So the key question is: has the gap been shrinking? And the answer is yes:

Table 8: The employment rate gap between BME people and the overall rate since 1997 [13]

Year	1997	1998	1999	2000	2001	2002	2003	2004
Gap	17.7%	16.9%	17.0%	16.4%	17.1%	16.6%	16.9%	15.4%

This is good news, but some caution would still be prudent. As the Ethnic Minority Employment Task Force commented: 'the employment gap is decreasing but remains substantial. Ethnic minorities are twice as likely to be unemployed and one and a half times as likely to be economically inactive as the overall working age population.' [14] The figures above vary a great deal from one year to another, and employment rates for BME people has risen in the past during good economic times, while they have suffered disproportionately during recessions. Eliminating discrimination and making sure the gap is finally whittled away are vital objectives if BME people are to realise the advantages of the Government’s anti-poverty strategy.

What next for trade unions

The TUC believes that establishing collective bargaining on race equality is key if institutional racism in the labour market is to be defeated. The organisation and recruitment of black workers is vital if future progress is to be made in addressing the problems that black workers face in the workplace and in encouraging increased participation in the trade union movement. Work has already started with the 2005 TUC Equality Audit focusing on the collective bargaining process. The results of the audit will highlight what initiatives affiliates are taking to mainstream race equality into collective bargaining and what work needs to be done.

Following the equality audit, the TUC will be establishing a web site where affiliates will be able to exchange good practice. Training will be developed on equality bargaining to assist affiliates and guidance on negotiating equality will be produced to assist stewards. The TUC is continuing to campaign for the establishment of union equality representatives who would have a statutory role to help deal with issues of inequality in the workplace. The TUC will be working with the Commission for Racial Equality to produce a toolkit that will provide guidance for trade unions and employers on mainstreaming race equality into the collective bargaining agenda.

A t the launch of the Government’s Race Equality Strategy in February 2005, the Rt. Hon Charles Clarke Home Secretary acknowledged that the Government could not deliver its Race Equality Strategy without the help and participation of all sections of society. The TUC believes that without the involvement of trade unions, the institutional racism that blights the lives of black workers inside the workplace cannot be effectively tackled.

Conclusion

The gap in the employment rate between ethnic minority people of working age and white people of working age has fallen by 2.3 per cent since 1997, a modest improvement but nowhere near enough to plug the current 15.4 per cent gap. If black and Asian workers are to continue to find work at the same rate as in the past seven years, the TUC has calculated that it would take 46 years before the rates of employment are the same.

The Government has set itself a target of 2020 for the elimination of child poverty, but if this is to be achieved, the improvement in the black employment rate needs to accelerate rapidly.

Active job creation schemes aimed at helping lone parents, and sick or disabled people into work, concentrated on those areas of the country where unemployment currently stands at more than 7 per cent, would have a significant impact on the numbers of black and Asian people out of work.

The UK’s towns and cities with the highest unemployment rates also tend to be home to large ethnic minority communities, so Government resources targeted on areas like Southwark where unemployment is as high as 13.5 per cent and Leicester (10.7 per cent) could see a dramatic improvement in the black unemployment rate.

This report highlights the need for concerted and co-ordinated action by all those attempting to eliminate racial discrimination in the labour market and in society whether through legislative or community based initiatives. The figures highlight the link between poverty and the barriers that black communities continue to face in gaining access to the labour market.

The TUC welcomes the initiatives that the Government is taking through the work of the Ethnic Minority and Employment Taskforce in response to the Prime Minister’s pledge to work towards removing discriminatory barriers faced by black workers in the labour market by 2014. We also welcome the initiative taken by the Chancellor in asking the National Employment Panel to examine ways in which the employment rates of black communities could be improved as part of the 2005 budget process. The measures that will come from these initiatives will play in important part in achieving the Government’s goal of eliminating child poverty by 2020.

Although the figures reveal that the measures being taken to combat labour market discrimination are resulting in improvements, the pace of change is still far too slow. More needs to be done in the private sector to encourage action on race equality and action taken to ensure that the public authority duties to promote race equality and eliminate race discrimination are effectively implemented.

Government has an important role to play in promoting equality of opportunity by ensuring that legislative measures designed to eliminate discrimination are enforced through its role as a major purchaser and consumer of goods and services (approximately £109 billion is spent on procurement annually).

The TUC believes that additional measures need to be taken to speed up the pace of change in all sectors of the economy and would like to see:

• The Government introduce extra measures to address race discrimination in all sectors of the labour market, central to this should be the extension of the positive duties of the Race Relations Amendment Act to the private and voluntary sectors.

• The Government use public procurement as a lever to improve the employment of black workers by explicitly including the promotion of race equality in contract criteria and ensuring that promotion of race equality forms part of the value for money consideration for all government contracts.

• The establishment of workplace equality representatives on a statutory footing to facilitate the independent collective representation of worker on issues of equality and discrimination in the workplace.

• Employers and trade unions through the use of collective bargaining develop clear action plans to tackle institutional racism and to establish targets, with clear time limits to achieve fair representation of black workers at all levels in the workplace.

Notes

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[1] Taken from Households Below Average Income 1994/95 - 2002/03, DWP, 2004 (using Family Resources Survey 2002/03) Tables 3.5 and 3.6 . We have followed the government in defining poverty as living in a household with a net equivalised income below 60% of the median, and reproduce only the data using this measure. These figures are for individuals, but, to produce the figures for ethnic groups, the authors had to classify everyone according to the ethnic group of the ‘household reference person’ (formerly known as the ‘head of household’) for the household in which they lived. This means that the figures in the row for ‘mixed’ families are for people living in households where the reference person classified her/himself as of mixed race, not where the household included people of different races. The authors add that 'the figures must be treated with some caution, as the sample sizes are small for ethnic minority groups, especially in the case of households headed by a person of mixed, Black Caribbean or Black non- Caribbean ethnicity. This means that figures for ethnic groups are subject to a degree of year on year sampling variation which [sic] is large in relation to any change which [sic] may have occurred in the estimates themselves. As a result, year on year comparisons are inadvisable.' We have not therefore produced figures showing changes in the risk of poverty faced by different ethnic groups over time.

[2] Source: as for t able 1, using the same definitions.

[3] Opportunity and Security Throughout Life, DWP, Feb 2005, p 6.

[4] Opportunity for All, DWP, 2004, para 18.

[5] Focus on Social Inequalities, ONS, 2004, table 3.22, using Annual Local Labour Force Survey, 2002/03

[6] Equality. Opportunity. Success, Ethnic Minority Employment Task Force, 2004, p 15.

[7] Annual Labour Force Survey 2002/3, ONS, table 3.1.

[8] Annual Labour Force Survey 2002/3, ONS, table 5.2.

[9] Taken from Work and Worklessness Among Households, ONS, Jan 2005 (using Labour Force Survey for Autumn 2004), t able 1(iv) . Classification into ethnic groups is as in table 1. Working age is taken as 16 - 59 for women, and 16 - 64 for men. A workless household is one with at least one person of working age and with no-one over 16 in employment - the percentages in the table are the proportion of such households among working age households. A working age household is one with at least one person of working age.

[10] Poverty in Britain : the impact of government policy since 1997 , Holly Sutherland, Tom Sefton and David Piachaud, Rowntree, 2004, passim.

[11] 2001 census data.

[12] Opportunity for All, DWP, 2004, indicator 19, accessed at http://www.dwp.gov.uk/ofa/indicators/indicator-19.asp on 25/02/2005 16:27:34.

[13] Ibid.

[14] Equality. Opportunity. Success, Ethnic Minority Employment Task Force, 2004, p 4.