The Income Crisis: a Gendered Analysis

Date
June 23, 2022
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THE INCOME CRISIS: a Gendered Analysis

This is the first of a series of briefings on the gendered dimension of the cost-of-living crisis. Upcoming briefings will look at the impact of rising costs on women, and the impact of the crisis on public services, among other related topics.

The cost-of-living crisis comes after a decade of wage stagnation and the erosion of social security benefits. This crisis is therefore not only one of rising prices but one of eroding incomes.

Wages

Labour shortages and a tight labour market led many to speculate that wages would grow significantly as workers’ bargaining power increased. But record-high vacancies haven’t led to record-high pay increases.

Workers are facing a pay cut in real terms of 1.9% as wages are not increasing as fast as prices. Public sector workers are seeing an even bigger deterioration of their salaries, with an estimated 4.2% pay cut after inflation is accounted for. Workers in some key sectors such as education, who are mostly women, are seeing the biggest falls in pay.

Bonuses on the other hand are at an all-time high, but these are concentrated in a few industries and they disproportionately benefit men – the gender bonus gap in 2021 was 40%.

Strong unions increase workers’ power to negotiate better pay and working conditions. At a time of eroding incomes, they are especially needed.

Social security

The erosion of the social security system during the last decade is a key contributor to the current cost of living crisis.

In April, benefits were increased 3.1%, just a third of price rises in the same month. After the cut of £20/week in Universal Credit, which led to a surge in families using food banks in the autumn, people on benefits are experiencing a sharp reduction in income in real terms. This is after two decades in which the income of poorest families grew by just 7%.

Women have felt the disproportionate impact of this erosion of benefits as they are more likely to rely on social security due to their lower wages and wealth, and are more likely to have a disability and caring responsibilities.

The one-off payments announced in May are very welcome and will put money swiftly in the pockets of those who are most struggling. But some gaps remain, particularly large families who are facing much higher extra costs in things like energy, food and clothing but receiving the same support as single people.

Debt and food bank use

The pandemic has eroded the financial resilience of many families to cope with rising costs of living. Women are the majority (61%) of those having to resort to debt to buy essentials, reflecting their lower incomes and budget responsibilities in poorer families.

As social security is eroded, destitution and food bank use continue to rise. In the year to March 2022 food bank use increased 81% compared to 2016. The Trussell Trust reports an “acceleration of need” in the second half of 2021/22, which coincides with the cut to Universal Credit and the rise in the cost of food and energy.

As the shock absorbers of poverty, women also bear the brunt of the physical and mental toll of debt and of struggling to make ends meet.

What we want to see

  • We welcome the commitment to raise benefits next year in line with September’s CPI (an inflation measure).
  • Increase child benefit to £50/week to support (large) families with the increasing child costs.
  • Remove the benefit cap and the two-child limit, as they are unfair and punitive measures for large families.
  • Support workers’ access to unions and establish collective bargaining across different sectors for decent pay increases and working conditions.
  • Increase public sector salaries in line with inflation, not least in recognition of the essential work of many of these key workers in the last two years.