News Article

More productive, in work, but hard-up - recent reports shed light on the region’s economy and living standards

Posted on 12 January 2018 (Permalink)

More productive, in work, but hard-up - recent reports shed light on the region’s economy and living standards

While Office of National Statistics figures show the region’s productivity is improving and unemployment rates falling, nationally the Joseph Rowntree Foundation suggest that rising employment is no longer necessarily linked to falling poverty rates. With the region’s relatively high poverty rates and a House of Commons briefing highlighting differences in regional disposable household income levels, Sherman Wong takes a look.


Productivity up, unemployment rates down

In December, the Office of National Statistics (ONS) released their regional productivity figures. Against the West Midlands’ record of comparatively low productivity per head, the figures encouragingly showed that the region had posted the one of the higher rates of growth in the UK. In its separate labour market release, the ONS also noted that the West Midlands had experienced by far the UK’s biggest growth in workforce jobs over the year to September 2017 and that, although the region’s unemployment rate was the second highest in the UK, it was moving in the right direction; it’s fall of half a percent being the second largest.

Short term statistics can be volatile and it will be hoped that these positive signs are part of a longer term trend. However, with the links between productivity, employment and wages apparently more tenuous and less understood than they were before the banking crisis, the extent to which any economic improvements feed through to living standards remains to be seen. This is an important issue for the region, where incomes are comparatively low and relative poverty rates high.


Disposable income

As context, in January, a useful House of Commons briefing looked at household disposable incomes. For the three years 2013/14 to 2015/16, it seems the median household disposable income in the UK was £471 per week before housing costs, or £402 after. The statistics show, however, that although better than Northern Ireland and Wales, the West Midlands’ £430 was England’s lowest figure before housing costs were taken into account, and at £370, the lowest in the UK once housing costs were factored in.

The Commons briefing comments that median incomes in the Midlands as a whole were slightly above average in the mid 1970s, “but are now substantially below average (almost 10% below in the case of the West Midlands)”, with most of this change happening between the mid 1970s and the mid 1990s. Interestingly, however, they note that over the past 20 years, “income growth in the Midlands has only been slightly slower than the GB average”.



By coincidence, in December, the Joseph Rowntree Foundation (JRF) published their report on poverty and how it had changed over those past 20 years. Although they say “very little” progress was made for working age households without children, the good news is that over the 20 years poverty has reduced “dramatically” for some groups of people who were “traditionally” most at risk, such as pensioners and some types of families with children. However, the JRF suggest that “that progress is beginning to unravel”, with poverty beginning to rise again for these groups. For example, they note that twenty years ago, a third of children lived in poverty, but after falling to 28% between 1994/95 and 2004/05, it was back up to 30% by 2015/16.

Bearing in mind the region’s falling unemployment rate, it”s worth noting that the JRF point out that “the continuing rise in employment is no longer leading to lower poverty” with many other factor at play, not least low pay, changes to the benefits and tax credits systems as well as rising housing costs among other things.

All in all, the JRF calculate some 14 million people in the UK live in poverty, or around a fifth of the population. Of that number, four million are children, 1.9 million are pensioners, while 8 million people in poverty live in families where at least one person is in work. Clearly, the picture is different in different parts of the county with poverty rates varying from place to place. With the West Midlands having some of the highest levels of poverty in the UK, the JFR noted that between 2003/06 and 2013/16 “there was a particularly sharp rise in poverty in the West Midlands”. Last year, DWP figures in a House of Commons briefing showed the region to have the UK’s second highest rate of relative poverty measured after housing costs are taken into account.