The amount of cumulative income a conventional family would need to attain a ëbasic standard of livingí has soared by five times as much as wages since the start of the recession. According to a report released by respected research charity, the Joseph Rowntree Foundation (JRF), hefty energy bills and benefit cuts are at the heart of the problem.
A couple with two children needs to earn roughly £40,600 to maintain an acceptable standard of living. This amount stands at almost double the pre-recession equivalent, underlining the disparity between peopleís incomes and their actual living requirements.
Calculated annually, the above value includes essential food, clothes, basic leisure activities and other items deemed as necessities. The JRF report is also made in accordance with the yearly measured ëMinimum Income Standardí, which is interpreted, by the charity, from the views of focus groups across England and paints a picture of how everyday life in the UK is developing. For example, families are adjudged to no longer require a landline telephone with mobile phones being considered a suitable replacement. Additionally, internet access is now deemed essential for citizens of all ages. Given the value of permanent access to such technology, measures must be taken to allow these amenities to be more affordable for the electorate as a whole.
Though the amount needed to ensure a familyís basic security have risen 46% since the recession, average earnings have risen a paltry 9% over the same period. Moreover, many families have been subjected to severe benefit cuts and tax credit alterations, losing them even more cash.
JRF warn in their report that even if wages increased this year, families at the low end of the financial spectrum will struggle to close the gap between their income and their basic needs, as their wages are just too small to cope with rising prices across the UK.
Katie Schmeuker, a manager at JRF, said: ìPeople have talked a lot about wages falling behind the cost of living but this really lays bare the challenge to make up lost ground. This isn’t just falling short, it’s falling behind.î
We can’t simply rely on wages improving as the economy recovers to solve the problem.”
ëNo guarantee recovery will restore living standardsí
Abigail Davis, one of the report authors, suggested that more and more people are falling below the minimum income standard every year. As a result, theyíre unable to keep up with rising prices of everyday necessities. Consistent with the data compiled, since 2008, food is up by 28%, household energy by 45% and bus travel by 37%. It is no wonder that a substantial number of families are struggling to combat with such staggering price increases.
Davis writes: ì”Throughout the past few difficult years, the people we talk to have held a consistent view of what it means to live at an acceptable level in the UK.
“It means being able to afford to feed your family and heat your home properly, but also having enough to buy a birthday present for your children, and to spend time with your family away from home, such as the occasional meal out.”
Additionally, Julia Unwin, chief executive of Joseph Rowntree Foundation, posited: ìThese figures show there is still a lot of work needed to make up the lost ground for low income families.
ìThe income they need to make ends meet has soared at a time when their ability to make up the shortfall is severely constrained.
ìThere is no guarantee recovery will restore living standards for the poorest families, so we need joined-up measures to help alleviate the pressure on the worst off households: as the recovery gathers momentum, we must ensure those in greatest need feel the benefits of growth.î
Itís conceivable that for two working parents, their child is their biggest expense. The economic burden which comes as a result of catering to your offspringís many whims takes a strain on two working parents ñ the plight of a single parent is more sobering still. The JRF report determined that a lone parent would now need to earn £27,000 to meet the minimum income standard; this is up £15,000 on the amount needed in 2008.
Scrutinising the effect of governmental changes in that time, the report says that for every £1 families have gained from the increased tax allowance, they have lost £4 due to cuts to the previous governmentsí tax credits and child benefit schemes. Although the increase in personal tax allowance has benefited single parents over the past year, minimum earnings standing at £16,300 are still up by 21% from 2008.
This report will do little to diminish mounting worries that despite the UK economy seemingly strengthening, many UK households are still worse off than they were before 2008 crisis. The JRF charity, which focusses on tackling poverty and equality, outline three main areas of concern regarding excessive household expense.
1. Wages of the lowest earners
2. The cost of necessities
3. The stateís role in offering support
The JRFís findings coincide with Nestlesí decision to pay the highly topical living wage as a minimum ñ set at £8.80 an hour in London and £7.65 in other areas ñ to all its employees regardless of position.
“We are proud to be the first mainstream manufacturer in the UK to become a living wage employer and see this as an opportunity to be a positive influence in our sector,” said the NestlÈ UK & Ireland chief executive, Fiona Kendrick.
“As a major UK employer, we know that this is the right thing to do. Not only does it benefit our employees but also the communities they live and work in.”
The industrial giant has taken action in light of recent governmental campaigning for the living wage to be adopted by all companies. Labelling it an ëexplicit goal, the government appears to believe the living wage could help lift one million workers out of relative poverty.
However, the living wage commission, comprised of anti-poverty pressure groups and various business executives, did not offer support to calls for a higher minimum wage. Instead the body conceded that employers deserve to retain their autonomy vis-‡-vis whether they pay a living wage to their staff.
Times are hard people, times are hard.