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October 19, 2019

Working poverty


October 19, 2019

It is generally believed that a higher employment rate reduces the poverty. It is also believed that full-time paid employment helps pull poor people out of poverty. But the last three decades have seen a rise in the number of working poor despite the fact that in most countries the unemployment rate stands at the lowest levels.

For instance, unemployment in the US stands at an historic low at 3.4 percent but at the same time the number of working people living in poverty has increased. In the 1980s, there were just seven million working poor in the US. But these numbers rose to 12.4 million in 2017.

In Britain, four million are living in working poverty. Despite working hard, these four million workers cannot meet the basic needs of their families. In Germany, one in five workers is living in working poverty. The reason is that one in five German workers gets less than ten Euros per hour wages – less than the minimum wage. Europe’s rich economy is not paying enough to every worker to live a decent life.

Like poverty, working poverty is also the by-product of the existing socioeconomic structure and system. Working poverty is the direct consequence of the super exploitation of the working class carried out by the capitalist class.

To increase employment, ruling classes internationally adopted a policy to lower wages, and create more part-time and casual jobs. This policy increased the number of working people but at the same time also increased the number of working people living in poverty.

In countries like Pakistan, one may think that being employed suggests the person is immediately pulled out of poverty, but this is not always the case. Finding a job does not guarantee someone will receive remuneration that is high enough to cover their basic needs and be relatively secure financially.

Many private-sector workers are paid wages below the amount that’s necessary to meet basic needs. The minimum wage is very low but even then is hardly implemented. In a recent survey conducted by PILER Karachi in garments factories in Karachi, it was seen that 85 percent factories are not paying their workers the minimum wage; and they are not covered under social security and old age benefits.

They are also not entitled to health or retirement benefits. Low-wage work is also associated with poor working conditions and job insecurity. These include poor health and safety standards, discrimination and excessive work hours. It is becoming extremely difficult for growing numbers of working parents to earn enough money to pay for food, clothing and accommodation due to weak wage growth and the rising cost of living.

In other words, for some workers employment no longer guarantees significant poverty reduction. Some workers remain poor because wages are too low to lift them and their families out of poverty.

The capitalist class throughout the history of the capitalist system always looked to the means and ways to modernise and further develop the productive forces. Their lust for super profits motivates them to develop more modern machines to increase the pace of production to maximise the exploitation of labour in a shortest possible time.

So they continue to develop productive forces, knowledge and technology to increase the production. But at the same time the capitalist class also has the instinct to minimise the cost of production in order to produce cheap products and to maximise the profits. They suppress the wages of labour to achieve that goal.

There is no doubt that capitalism has made significant advances in the development of productive forces in the last three decades. Technological advancements, automisation, artificial intelligence and information technology have transformed the production of goods, delivery of services, management of workplaces and transportation. Capitalist leaders, academics, economists and experts are talking about the fourth industrial revolution.

The capitalist class internationally has used technological advancement and structural changes in the capitalist economy to amass enormous wealth. The concentration of wealth into a few hands has created levels of inequality hardly seen before. The issue at the moment in my view is not the creation of wealth but the fair distribution of it. This advancement in science, technology and research has not been fully used to solve the problems of climate change, poverty, diseases, hunger, and inequality and to provide the basic needs to every person on this planet.

But at the same time, the last three decades have seen a tendency of keeping wages at lower levels, and also worsening of work conditions. The capitalist class globally has mercilessly attacked living standards, working conditions, wages and welfare programmes. The last three decades have not only seen the super exploitation of working people but also the transfer of wealth from the middle and working classes to the capitalist ruling class.

These continued attacks now have created conditions in which working poverty is thriving. Working poverty has not only increased in developing countries but also in the rich Western countries. Low wages, stagnant incomes and attacks on housing and other benefits have forced many workers to live in conditions of poverty.

Working poverty is a symptom of an ailing and broken system. What is needed to end working poverty, hunger, inequality and poverty in general is an economic system designed to meet the needs of the people and not to serve the interests of the few handful of billionaires. People need more control over their working lives and a fairer share of the wealth they create. Democratisation of the economy and of means of production is necessary to serve the interests of the working class and the middle class.

Working poverty will not end without abolishing contract employment, casual labour and precarious work. Decent work and employment, living wages and better working conditions will end working poverty. That means giving all working people the freedom to have a union in their workplace to negotiate fair pay and conditions.

The neoliberal onslaught, privatisation, deregulation and structural reforms dismantle or reduce the size of the public sector in most countries. The public sector used to provide decent and secure employment with better wages. Pension and other benefits were also available for public-sector workers.

But neoliberalism and free market economic policies brought casual and contract jobs, lower wages, longer working hours and worsening working conditions. Welfare state, social programmes and benefits were replaced with austerity, cuts and attacks on benefits and social programmes. The democratic, legal and economic rights of workers were taken away or curtailed. Trade union and collective bargaining rights were attacked in the name of labour flexibility and labour market liberalisation. The attacks on trade unions and collective bargaining rights played an important role in lowering wages and worsening working conditions.

The writer is a freelance journalist.