Trends in parental employment in London
Commissioned by: Child Poverty Action Group
Between 2010 and 2013, the number of children in London living in families where no adult was working fell by around 100,000 or about 25%. This is a very rapid change, all the more so in the light of London’s reputation as suffering from an intractable problem of child poverty- although that reputation may survive for the time being, as there is little evidence to date that the fall in household worklessness has translated into lower poverty once housing costs are taken into account.
How has this fall in worklessness in London come about? There are two obvious lines of explanation, which are not mutually exclusive. One-we can call it the ‘positive’ hypothesis- is simply that employment has increased among households which were previously subject to high risks of worklessness. The other – which we can think of as ‘negative’ or at best neutral - is that the fall is largely a matter of locational change, that families with higher risks of worklessness have moved out of London, or have moved out more than other families, shifting the population balance toward groups with higher chances of employment, with no effect on worklessness at super-regional level.
Both positive and negative hypotheses can draw on the fact that there have been extensive changes to the benefit system over recent years, some of which can be expected to have had particular impacts in London. Housing benefit for private sector tenants has been cut back to support only the bottom 30% of local rents; a ‘benefit cap’ directed at larger families in private rented accommodation in expensive areas has been imposed. Both of these changes will have had more effect on tenants in London: as was their intention, given that any plan to reduce private sector housing benefit expenditure will almost inevitably be directed at the most expensive areas. At the same time, worksearch conditionality has been imposed on single parents with younger and younger children. Although this measure was not introduced with London in mind, the impacts will be stronger in the capital due to the population age structure (London has proportionally more children in younger age bands and fewer in older age bands).
Benefit changes are not of course the only factors that might affect worklessness in London, either through the employment or location routes. It has long been recognised that much of the parental employment difference between London and other parts of the UK is due to lower rates of part-time working among mothers: the long labour market downturn from 2008 was marked by an increase in part-time jobs as hours were cut back- perhaps this development, however disadvantageous for others, allowed more mothers to take up employment? On the location side, the freezing of the housing market in response to the credit crunch will have had an impact on London’s population, as socially selective migration flows tied to owner-occupation are an important contributor to the capital’s population balance. Typically, outward flows are tilted towards young couple families with better employment chances: if these families find themselves for a time unable to finance outward moves by selling their London property, the percentage of children in workless households in London may fall through a ‘denominator’ effect without any change in numbers. If younger couples with higher qualifications ‘crowd in’ to the private rented sector because they can’t get on the housing ladder, they may ‘crowd out’ more disadvantaged families.
- It is in our view unlikely that location plays a major role in explaining the numerical fall in worklessness among households with dependent children in London. The effect of housing benefit changes has primarily been on location decisions within the capital. There is no evidence of change in the balance between single parent and couple families, as would be expected if there were large scale locational changes.
- Measuring from 2008 (thus before the main employment impact of the recession) to 2014, the main contribution to falling worklessness among households with children has come from single parents. There has been no change in the employment rate for mothers or fathers in couples. However, the percentage of couple households which are completely without employment has fallen, suggesting that employment is less concentrated in dual-earner households.
- The employment rate for single parents in London is now very close to the national rate, while the employment rate for mothers in couples remains far below the national rate.
- Both full-time and part-time employment has risen for single parents since 2008, but part-time employment has risen much more than full-time (from 20% to 28%). There has been no change in either part-time or full-time employment for mothers in couples.
- There has been only a modest and far from unprecedented increase in the part-time share in employment in London since 2008, and not on a scale to make a major difference to parental employment. There have also been no major changes in the occupational structure of part-time employment. The increase in part-time employment for single parents is therefore unlikely to reflect changes in labour demand.
Greater engagement of Jobcentre Plus with single parents in London, dating back to 2008, and the progressive introduction of worksearch conditionality are the most likely explanations for rising employment among households with children.