The Impact of Changing Working Hours Patterns on Household Poverty
“In debates about poverty and inequality, we hear a lot about hourly pay and about the employment rate. But changing patterns of working hours have been at least as important in shaping the distribution of income across households, and in underpinning the rise in in-work poverty. In this project, we’re looking at key trends in working hours witnessed in the last 20 years, and to explore what role policy can play in shaping these trends or mitigating their impact. With COVID-19 likely to have major disruptive impacts upon the labour market, it is vital that we understand these key trends.”
The Fraser of Allander Institute together with the Scottish Centre for Employment Research are working on a project funded by the Standard Life Foundation to examine changing patterns of working hours and implications for poverty and inequality.
During the past two decades there have been substantial changes in the patterns of hours worked in the UK. But the trends have played out very differently across different groups and job-types. But relatively little is known about what drives the trends.
This project has three main objectives. First, it is examining trends in working hours and underemployment. Second, it is assessing the role that different factors have played in driving these trends. And third, it is discussing whether or not there is a role for policy in influencing patterns of working hours or in mitigating the effects of changing working patterns on the distribution of incomes.
Although the project was conceived well before the Covid-19 epidemic took hold, we plan in due course to examine how working patterns are changing during the pandemic and (hopefully) the recovery. But in the meantime it is still useful to consider what has happened in recent years, as past trends may shed light on how the labour market might respond to current and future economic shocks and policy responses.
How do weekly hours worked affect earnings inequality and in-work poverty? This article examines this question, coinciding with the launch of our Interim Report for the Standard Life Foundation.
Labour market data for the second quarter of 2020 indicates that the headline working age employment rate remained remarkably stable during the lockdown. But under the surface there have been significant changes in labour market activity – notably in terms of hours worked – and the pattern of these changes differs substantially across occupations. Employment in low-paid occupations has declined (offset by increased employment in high-paid occupations), whilst employees in low-paid occupations are much more likely to have been furloughed than those in higher paid occupations. This article documents these changes and discusses some implications.
Implications of hours worked for inequality and poverty: Interim Report
Hours worked play a significant role in determining earnings inequality among those in-work, and can influence the likelihood that working households find themselves in poverty. The security and regularity of hours also influence financial security and wellbeing.
Earlier in 2020, we embarked on a new project that looks at how hours of work influence inequality and poverty. The aims of the project are to examine trends in hours worked, the factors determining those trends, how those trends influence poverty and inequality, and to make recommendations for policy.
The work is made possible by the support of the Standard Life Foundation, and is being delivered by the Fraser of Allander Institute and the Scottish Centre for Employment Research.
Today we publish findings from the project’s interim report, summarising our initial analysis of key data. The final report will be published in Spring 2021.
David has led the Institute's work on Fiscal Policy since 2016 and has been an Adviser to the Scottish Parliament’s Finance and Constitution Committee since August 2016.
His research interests are in the economics of devolved finances, labour markets and inequality. Previously he worked at the University of Stirling and was a Fellow of the Centre on Constitutional Change at the University of Edinburgh.
Graeme re-joined Strathclyde in 2016 after 8 years in the Scottish Government.
Graeme is the Head of the Economics Department and Director of the FAI. He leads on the knowledge exchange activities of the Institute and is also a member of various public and private sector committees and advisory boards.