Low benefits and wages force people to work informally

Low benefit rates and low wages are forcing people in poverty to undertake ‘cash-in-hand’ low-paid jobs, according to a study published today by the Joseph Rowntree Foundation.

These factors, alongside rules which limit the hours some groups can work, are forcing people to work informally in response to acute poverty or crises such as family breakdown.

People who took part in the study felt it was easier to get informal work and felt it increased their confidence, improved their skills and provided financial support.

They also felt the tax and benefit system trapped them into a cycle of poverty with few incentives to work formally.

Author of the report Aaron Barbour said: “People in deprived areas are resorting to informal paid work because they are trying to support, feed and clothe families.”

“They are hard working, ordinary people trying to survive day-by-day. The government needs to understand and include the informal economy in all its strategies if it is to reach its employment, anti-poverty and regeneration targets.”

“They should Harness the assets of people working informally – their effort, skills and willingness to work – rather than seeing it as a problem,” he concluded.

The report recommends:-

• Supporting, training and developing those who want to move into formal work

• Reforming the tax and benefit system based on an understanding of why people work informally

• Introducing flexible employment to accommodate needs around childcare or health issues.

The report is informed by six years of work by Community Links, a charity running community-based projects in East London.


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