Families across the country are facing hard times. With inflation rising much faster than earnings, unemployment stubbornly high and the govern-ment about to embark on the most severe programme of fiscal austerity since the Second World War, living standards are being squeezed and women are on the frontline.
With £80 billion set to be cut from public services over the next four years, the Women’s Budget Group has shown the scale of the challenges facing women in the UK. Its modelling suggests that lone parents and single pensioners (the majority of whom are women) are the groups that will be most affected by public service cuts, with each set to lose 18.5 per cent and 12 per cent of their respective incomes as a result of spending reductions. Services that women (who remain the most likely to take on primary caring responsibilities in a household) make more use of than men – children’s centres, health services, social care services, day-care centres and education services – are already being pared back and the scale and quality of provision is set to continue to decline over the spending review period. As well as leading to service reductions – longer hospital waiting times, poorer quality after-school care, less-flexible support for pensioners seeking to live independently – these cuts will also increase the unpaid work that women undertake: women’s additional responsibilities as carers and cleaners look set to rise.
Cuts in welfare spending will also fall disproportionately on the finances of women and their families. Child Benefit, which is facing a three-year freeze and will be completely withdrawn from households containing one higher-rate taxpayer, is paid almost 100 per cent to women, while women are also far more likely than men to benefit from the childcare element of tax credits (which will be cut by 10 per cent) and are the sole recipients of the Health in Pregnancy Grant (now completely abolished) and the Sure Start Maternity Grant (to be cut for all but the first child). The Institute for Fiscal Studies suggest that child poverty is set to rise by 300,000 over the next two years as a direct impact of the £18 billion of welfare cuts that the government has committed to introduce: women and their families will be at higher risk of poorer health, achieving lower educational outcomes, homelessness and future worklessness than would have otherwise be the case.
And, as if service and benefit cuts weren’t enough, UK households are also being hit by rising inflation, forecast to rise above the Bank of England’s target rate for much of 2011, due to rising international commodity prices and Sterling’s depreciation but also the government’s decision to raise VAT to 20 per cent. For those in work, earnings are failing to keep up. A weak labour market that has yet to see any real recovery from the recession, the public-sector pay freeze and a generally uncertain economic outlook mean that pay settlements remain significantly below the Retail Price Index, with the median currently 2.8 per cent and settlements in some sectors far lower. Combine the impacts of real wage falls with over £3 billion of cuts in tax credits and it’s clear that the incomes of those who are in work are facing a considerable strain. For example, TUC analysis has shown that considering welfare and tax credit cuts alone, a dual-earner family with two children, where each adult works full-time for the minimum wage, is set to lose £2,700 a year by 2013.
And more extreme financial challenges will be faced by those facing unemployment. The recession led to more men losing their jobs than women. The working-age male employment rate has fallen from 79 to 75.7 per cent, while women’s employment rates have seen a smaller fall (from 67 to 65.3 per cent). But over the last year a different picture has emerged – male employment prospects have shown some recovery (with a 238,000 increase in employment levels and a 0.4 point increase in the rate) while female employment levels have continued to decline (by 19,000 on the year and a 0.5 point fall in the rate). Similarly, in recent months female unemployment levels have reached their highest since the start of the downturn, whereas male levels are now 72,000 lower than their recessionary peak.
Young people
Young people have been hit far harder than workers in other age groups as a result of the recession. TUC analysis of Labour Force Survey data from July to September 2010 shows that in some areas of the country more than 20 per cent of young women (16-24) are unemployed, compared to far lower percentages in higher age groups. It also demonstrates that, in certain regions, young women’s unemployment rates have risen more quickly than young men’s (although in other regions the reverse is the case). In particular, in Merseyside, unemployment among young women has risen by 11 per cent since the recession started, in the West Midlands the increase has been 10 per cent and Scotland and Yorkshire have both seen nine percentage point increases.
Why is this the case? The answer is likely to be linked to the prospects of the sectors where women work, as the jobs that adults in the UK undertake still vary significantly by gender. For example around 18 per cent of women employees work in secretarial and admin roles with 10.3 per cent employed in customer service and 15.8 in personal services (such as care or cleaning work). In contrast only 4.7 per cent, five per cent and 2.8 per cent of male employees respectively work in these areas. And, since the start of the recession, vacancies have fallen in areas where women work – for example, by 34,000 in retail and wholesale work and 14,000 in administrative and secretarial jobs. With the most recent GDP estimate showing that even without the snow the economy was stagnant at the end of 2010, consumption growth likely to remain muted during 2011 (as household budgets face real-terms reductions and the housing market remains slow) and recent PMI data from the services sector suggesting that growth in early 2011 was falling, the reality is that future months are unlikely to see significant jobs growth in sectors which are key employers of women workers.
For women working in the public sector the position is even more severe. The Office for Budget Responsibility (OBR) estimates that employment levels in the public sector will fall by 330,000 by 2014-15 as a result of the cuts. But the OBR’s modelling is only an estimate of job losses – the real changes will be determined by decisions taken by individual public-sector employers and early evidence suggests that cuts may be greater than the OBR predict: GMB analysis shows that 180,000 public-sector jobs are currently at risk and CPID’s forecast (based on the intentions of public-sector HR managers rather than a macro-economic simulation) suggests that, over the same period as the OBR estimate, 600,000 public-sector jobs will go. Over 30 per cent of women who work are employed in the public sector. With redundancies already rising and vacancies in sharp decline (over the last year the number of vacancies in education has fallen by 26,000 and by 18,000 in health and social work) when the spending cuts kick in this April further reductions are all but inevitable.
Without a radical re-assessment of its economic policies this government is placing the livelihoods of women across the UK at risk. The TUC’s primary current concern is therefore to make the economic and social case against the government’s deficit reduction proposals and for a strong strategy for sustainable growth. The social costs of the cuts are already emerging – with women facing the greatest risks from spending reductions – and the consequences they will have for the UK economy are significant: low growth during 2011 is likely to lead to unnecessarily high unemployment, reduced investment and a lower tax take, factors which all place the longer-term outlook for the public finances and the UK’s future economic competitiveness at risk. Now, more than ever, it’s time for a Plan B.
Nicola Smith is Head of Economic and Social Affairs, TUC
Women’s Budget Group, The Impact on Women of the Coalition Spending Review 2010:
http://www.wbg.org.uk/RRB_ Reports_4_1653541019.pdf
TUC welfare analysis:
http://www.tuc.org.uk/ social/
tuc-19126-f0.cfm
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