Income and employment: introduction

Income and employment are key social determinants of population health and health inequalities (Public Health Scotland, 2020, Health Equity in England: the Marmot Review 10 Years on, 2020).

Note: the latest version of the Informing Interventions to reduce health Inequalities (Triple I) tool (updated in 2018/19) provides evidence on the health impacts of a range of income interventions and changes in employment.  

From 2022, rising food and energy prices, presents a further severe challenge to population health in the UK and Scotland, particularly for households already under economic strain in the aftermath of COVID-19 and a decade of Welfare Reforms (Patrick and Pybus, 2022).

INCOME

Measuring and describing income and poverty

There are a number of different ways to measure and describe poverty:

  1. Relative and absolute poverty lines - defined as 60% of median income, adjusted for household size and composition. Mack (2016)
  2. The Minimum Income Standard., is a ‘Consensual approaches’ developed by Joseph Rowntree Foundation  This uses public opinion to identify income levels that will allow people to achieve a minimal, socially acceptable standard or living. 
  3. Minimum income for healthy living (MIHL) - the minimal costs required to obtain “the major personal requisites for health and nutrition, physical activity and psychosocial relations…plus a home and other necessities” are set by expert opinion. Morris et al. (2000)

Development of new poverty metrics

 In September 2018, the Social Metrics Commission published A new measure of poverty for the UK, incorporating inescapable costs (such as disability and childcare), resources such as savings, and included groups excluded from previous measures, such as rough sleepers and the hidden homeless.  The third annual report of the Social Metric Commission was published in 2023. Its main finding was that rates and levels of poverty in the UK have increased since 2019/20.

Poverty and health

Household income matters for child health and has direct and indirect links with children’s outcomes, especially their social and emotional development. 

Income is related to cognitive development and educational attainment, which has long-term consequences for health inequalities as children grow into adults. 

Household income impacts adult mental health and wellbeing, with increased income reducing anxiety, stress and depression in particular. 

Increased income broadens choices for education and employment, with likely further positive impacts on health.

Poverty

Using the 60% of median income measure, 19% of the Scottish population (1.02 million people) were living in relative poverty in 2020-23 before housing costs.  When housing costs are taken into account (typically referred to as "after housing costs poverty"), the number of people in poverty increased to 1.1 million.  

In 2020-23, 57% of working age adults and 70% of children in poverty in Scotland lived in households where someone was in paid employment. The interactive Scottish Government website here has more information.  

National Minimum Wage and poverty

Changes to the tax and benefit system and increases in the value of the statutory National Minimum Wage (NMW) mean that a couple with two children where both work full-time on the NMW fall just short of attaining the Minimum Income Standard (MIS), when additional cost of living payments are included.

Lone parents working full-time on the NMW fall 21% short of the MIS.

Couples with two children with one FT and one part time worker fall 12% short of the MIS, even when the cost of living increase is taken into account.

Pensioners and poverty

Low-income pensioners (with income from the State Pension or Pension Credit only), came close to attaining the MIS in 2021. However, due to the rising cost of living they position has worsened. Even when the cost of living payments to pensioners are taken into account, they are still only able to attain 80-90% of the minimum income standard in 2023.

Benefits and poverty

In April 2023, there were 481,371 people claiming Universal Credit in Scotland.

There were still 80,000 households in Scotland claiming tax credits (April 2023) and 184,000 people claiming Employment and Support Allowance (May 2023). 

Out of work benefit levels are set at too low a level to allow for those out of work and their families to have a standard of living members of the public agree would let them live with dignity (‘Minimum Income Standard’). 

In 2023 out of work benefits plus cost of living payments covered just 30% of what a single-working age adult, 27% of a working-age couple without children, 52% of what a lone parent and 50% of what a couple with two children, would need to achieve a socially acceptable standard of living.  

Richardson et al. (2020) found that increasing the value of means-tested benefits by 50% would be an effective policy for reducing inequalities in mortality in Scotland.

EMPLOYMENT

Good work can reduce the risk of premature mortality and morbidity:

  • A 2011 systematic review concluded that becoming unemployed increased the mortality rates by 63% compared to those in continuing employment (Roelfs et al, 2011). 
  • Gaining paid employment for those receiving out-of-work incapacity benefits is rare but may improve mental and physical health (Curnock et al, 2016). 
  • Moving into unemployment is strongly associated with a deterioration in mental health, while gaining a job from unemployment is associated with an improvement in mental health (Kromydas et al, 2021).

Active Labour Market Programmes (ALMPs) can improve mental health of participants:

  • Wang et al. (2020) found that people participating in ALMPs had better mental health than people who were unemployed or economically inactive.  For women, ALMP participation had similar levels of mental health to those in paid employment.  For men, those in paid employment had higher levels of mental health than ALMP participants (unless the jobs were PT and temporary).

A large number of working-age people lack paid employment:

In August 2023, 507,464 people aged 16-64 (14.7%) were claiming out-of-work benefits* in Scotland (DWP Stat Xplore). 

There are around 109,505 adults counted as claimant count unemployed (available for and looking for work and claiming unemployment-related benefits).

Most of those claiming out-of-work benefits or not in work have health problems or caring responsibilities which limit their capacity to work. 

Not all work is good for health

Jobs which increase the risks of physical or mental harm to workers, or which do not lift people out of poverty, are also damaging to health. 

Mortality rates for people in some types of jobs (elementary, process and cleaning) were three times higher than those in others (professional and managerial) in the UK, although it is not clear what proportion of the difference in mortality was due to job characteristics Katikireddi et al. (2018).   

Employees with three or more negative job characteristics** were much more likely to report having fair or poor health than those with no negative job characteristics: 21% vs. 7% (The Health Foundation, 2020). 

Work is not always a route out of poverty  

Many families and individuals in Scotland are in work but on a low income, claiming tax credits or Universal Credit to top their income from earnings up. In April 2023, there were almost 56,000 working families claiming tax credits and more than 171,500 individuals in work claiming Universal Credit (DWP Stat Xplore) in Scotland. 

58% of children and 56% of adults in households in households claiming Working Tax Credits  were in relative poverty after housing costs in 2021-22 (HBAI, UK Data).

In 2019-22, after housing costs, 410,000 working-age adults and 170,000 children in Scotland in poverty lived in working households. 

Employment opportunities are unevenly distributed

Employment rates are lower for:

Job opportunities are also lower in certain places in certain regions and places (e.g. former industrial regions) as well as during recessions and periods of weak growth.   

* Universal Credit (searching for work, planning, preparing or no work requirements), Employment and Support Allowance, Incapacity Benefit, Pension Credit, Job Seeker’s Allowance or Income Support (Lone Parents).

** Including low job autonomy, low pay, low job wellbeing, low job security and low job satisfaction.