An Anatomy of Economic Inequality in Wales

There is an interesting story on the BBC website about a report on the economic inequalities that exist in Wales. I don't think there's anything surprising about the headline:

     'Social background affects poverty' in Wales says study – BBC, 12 May 2011

Yet this does appear to be a very heavyweight piece of research. A quick skim through it has convinced me that it is going to be well worth reading, and I'm writing this in the hope of persuading others to do so too. Just click the image:

     

The Executive Summary is fairly concise, so I thought I'd copy it as a taster of what's inside.

Executive Summary

The report sets out outcomes in education, employment, earnings, income, poverty and wealth in Wales in comparison to other areas of the UK. The data analysis compares outcomes by gender, age, ethnicity, religion, disability and housing tenure. Analysing inequality within a small country that has relatively low incidence of certain population sub-groups (e.g. ethnic minorities) sometimes limits the degree of detail that can be achieved in the analysis. Despite this, the following key findings emerge:
 

•  The historical productivity gap relative to the UK is continuing to widen for Wales. The industrial and business structure produces weak demand for skills, with individuals’ earnings in Wales being, on average, lower than the UK average. Disadvantage in education, and subsequently in employment and earnings, attaches particularly to young people, those of Bangladeshi and Pakistani ethnicity, and people who are work limiting and DDA defined disabled. Within each of these groups, women are generally more disadvantaged.

•  While overall in 2009 two-thirds of pupils in Wales attained key stage 4 qualifications at National Qualifications Framework level 2 (NVQ level 2 or equivalent) by the time they were 16, the chance of gaining these qualifications was strongly related to family income. Pupils eligible for Free School Meals (FSM) are 2.5 times less likely to get A*-C grades in core subjects than their ineligible peers. People defined as both DDA disabled and as having a work limiting condition have by far the lowest educational achievements of all the equality categories. Both men and women in these groups are 3 times more likely to have no qualifications compared to non-disabled people.

•  People who are both DDA disabled and have a work limiting condition experience most disadvantage in relation to employment. Seventy four per cent are not employed. This is more than 3 times the overall UK proportion of 22%. Women are disadvantaged in employment terms: in almost all population groups women face an above-average incidence of non-employment. This is particularly the case for some ethnic minority groups in Wales, particularly women of Indian, Bangladeshi and Pakistani and Chinese ethnicity.

•  The median hourly earnings of men in Wales (£9.88, measured between 2004/5-2008/9) were just above the overall UK median (£9.81), while median female earnings (£8.04) were only 82% of the UK median, giving a Wales gender gap of 19% in hourly earnings. Using a low-pay threshold defined as two-thirds of UK median earnings, the proportion of employees who are low-paid is higher in Wales than in the UK as a whole. In terms of hourly earnings 26% of employees in Wales are low-paid, compared to 22% in the UK. The incidence of low weekly pay for full-time employees in the UK is 22%, in Wales 28% and for women full-time employees in Wales it is 38%: a ‘gender penalty’ of 10%. Groups whose median earnings fall below the two thirds of the UK median for full-time employees are young people; those of Bangladeshi or Pakistani ethnicity; workers with no educational qualifications, workers who live in social housing and employees (particularly those working part time) in Elementary Occupations, Retail and Customer Services occupations and Personal Services.

•  Approximately a fifth of the Welsh population live in poverty (measured after housing costs). Those living on the lowest incomes are once again the youngest, disabled people, those of Pakistani and Bangladeshi ethnicity and those living in rented accommodation. However, lone parents are the most susceptible group, with almost half living in poverty. Being in work does not necessarily provide a route out of poverty, with 13% of in-work households in Wales living in poverty. In-work poverty is again most prevalent among lone parent households, Asian households and those who are renting. Levels of wealth are lowest among young people, lone parents and single households, non-white households and those with a work-limiting illness or disability. The lower levels of educational attainment observed among protected groups will effect the positions they achieve in society and the resources and opportunities that these positions confer.

•  Overall levels of inequality within Wales are not as wide as in the rest of the UK as Wales has relatively few people who earn the highest salaries or who are ‘very rich’. Those who are among the wealthiest 10% of people in Wales have around £100,000 less total wealth compared to the wealthiest 10% across the UK as a whole. The level of inequality within most sub-groups of the population is generally narrower than that observed across the population as a whole. Inequality between groups therefore does indeed contribute to overall inequality. However, there is a considerable level of inequality between rich and poor within each of these groups, unconnected with and unexplained by group membership.
 

The UK NEP report suggested that there is little awareness of the enormity of economic disparity which ‘runs through society, from rich to poor,” and that this ‘acts as a constraint on any policies designed to contribute to reducing inequality’ (NEP 2010:398). This report provides the most thorough examination of the material consequences of difference undertaken within Wales. The findings in this report represent a significant body of new evidence on socio-economic inequalities. In each case, the evidence connects the distribution of economic outcomes to social characteristics both between and within equality groups. A widespread recognition of inequality, its causes and effects, is a precursor to the use of policy to intervene to interrupt its reproduction.

Additionally, the raw data can be downloaded in the form of spreadsheets from this page.

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Without wanting to be too dramatic, the economic situation in Wales is very serious, and generally worse than it is in other parts of the UK. As a nation, we need to address this and do something about it.

Of course it is right and good that we focus resources on those in our society who are disadvantaged, and that we do everything we can to overcome the effects of poverty ... but that is to deal only with the symptoms rather than the cause. Poverty is the lack of money. We need to become more wealthy and more prosperous as a nation.

I firmly believe that this is something that we must do for ourselves, rather than relying on the richer parts of the UK to bale us out. We have been living like this for much too long. In the short term it is right that we should seek fair funding on the basis of need ... but only in the short term. The long term answer is to make ourselves more self-sufficient, and this will require taking the levers that control our economy, such as taxation, into our own hands. If we shy away from this, how can we expect anything to change? Our economic decline relative to the rest of the UK will continue until we do.