An Anatomy of Economic Inequality in Wales A report prepared on behalf of the Wales Equality and Human Rights Commission Presented by

Rhys Davies, Stephen Drinkwater, Caroline Joll and Victoria Wass

Introduction • National Equality Panel’s (NEP) Report An Anatomy of Economic Inequality in the UK (`The Hills Report’) published in 2010 • Provided national picture of economic outcomes (earnings, income and wealth) – overall and for population sub-groups • Relatively little data for regions, devolved nations • What are the patterns of inequality in: – a relatively deprived nation?

– a nation relatively reliant on the public sector as a source of work? – a nation that has devolved law making powers?

Scope of Research • EHRC commissioned WISERD to co-ordinate the production of a report for Wales • The report sets out outcomes in education, employment, earnings, income, poverty and wealth in Wales – a) in comparison to other areas of the UK – b) compares outcomes where possible by gender, age, ethnicity, religion, disability and housing tenure

• • • •

More limited than Hills report due to time, resources and data 15 contributors from 4 Welsh Universities Project undertaken Nov 2010 – Feb 2011 Report available from WISERD website http://www.wiserd.ac.uk/research/completedprojects/inequality-in-wales/

Data Sources • Annual Population Survey main source of data for education, earnings and employment chapters – sample sizes still small – merged APS data 2004/5 to 2008/9

• Other sources – Education – published data from National Pupil Database – Income and Poverty – Households Below Average Income, British Household Panel Survey, Family Resources Survey – Wealth – Wealth and Assets Survey

• These are research statistics – not National Statistics – would not always meet quality criteria of WAG/ONS – points towards what is feasible

Overview of Welsh Population Gender male Age Burgess et al. (2010) examine this in some detail and find that most of the gap has occurred in schools below the first quartile – also a recent fall in international ranking according to PISA

• Income appears to be very important – pupils eligible for FSM are 2.5 times less likely to get A*-C

• Fairly small differences by gender but wide ethnic variation – highest achievement by Chinese and lowest amongst Black groups

• Very low levels of achievement for those with SEN

Examination Results in Wales, 2000/1-2009/10

2000/1 2001/2 2002/3 2003/4 2004/5 2005/6 2006/7 2007/8 2008/9 2009/10

% aged 15 at the start of the academic year achieving GCSE A*-C in No recognised Level 1 Level 2 core subjects qualification 84.5 49.8 36.5 4.8 84.8 53.5 36.9 4.7 85.1 51.1 37.5 4.6 85.3 51.4 37.7 4.4 85.2 52.2 38.4 4.3 86.0 53.8 39.7 3.9 86.0 55.0 40.0 3.9 86.8 58.0 44.4 2.5 88.2 60.7 46.0 1.9 89.3 63.1 47.4 0.6

% aged 17 achieving Level 3 92.7 94.4 93.9 94.9 94.4 93.9 93.9 94.2 96.8 94.6

KS4 Examination Results in Wales by Free School Meet Entitlement, 2007-2009 70

% aged 15 at the start of the academic year

60

50

40

30

20

10

0 Level 2

GCSE A*-C in core subjects1 2007

Level 2

GCSE A*-C in core subjects1 2008

GCSE A*-C in core subjects1 2009

Academ ic Achievem ent FSM eligible pupils

Level 2

Not eligible pupils

KS4 Examination Results in Wales by Gender, 2007-2009 100

% aged 15 at the start of the academic year

90 80 70 60 50 40 30 20 10 0 Level 1

Level 2

2007

GCSE A*-C in core subjects1

Level 1

Level 2

GCSE A*-C in core subjects1

2008

Level 2

2009

Academ ic Achievem ent Boys

Level 1

Girls

GCSE A*-C in core subjects1

KS4 Examination Results in Wales by Ethnic Group, 2007-2009 90

% aged 15 at the start of the academic year

80

70

60

50

40

30

20

10

0 White

Mixed

Asian

Black

Chinese or Chinese British

Ethnic Group Level 2

GCSE A*-C in core subjects1

Any other ethnic group

Unknow n

2007

Level 2 2008

Special Educational Needs

GCSE A*-C in core subjects1 2009

School Action

School Action Plus

Statemented

All pupils on SEN register

School Action

School Action Plus

Statemented

All pupils on SEN register

School Action

School Action Plus

Statemented

All pupils on SEN register

% aged 15 at the start of the academic year

KS4 Examination Results in Wales by Special Educational Needs, 2007-2009 30

25

20

15

10

5

0

Highest Qualifications •

Analysis is based on working age population (excluding fulltime students) mainly using Annual Population Survey – Combined GCSE category reported => due to limitations in which data is coded – Other qualifications reported separately => important given increasing amount of immigrants, especially in some regions

•

Labour Force Survey also used to show changes between 1992 and 2010

•

Increasing achievement in Wales has translated into a more highly qualified potential workforce – but graduate gap with rest of the UK has increased slightly – also a higher percentage with no qualifications in Wales

Highest Educational Qualification of the Working Age Population Wales

1992

2001

2010

Rest of UK

1992

2001

2010

0%

10%

20%

30%

40% 50% 60% Working age population

70%

80%

90%

Higher degree

Degree

Higher education

A level or equivalent

GCSE or equivalent

Other qualifications

No qualifications

100%

Variations in Qualifications: Selected Findings •

Small gender differences again with similar patterns to other parts of the UK – higher (lower) % of females with GCSE (A levels) – but higher % of graduates in LESE (proportion of males with higher degrees is quite noticeable)

•

Large ethnic differences – Indian males in Wales are extremely highly qualified (over a half have a degree), next come Chinese males – high proportion of Pakistani (over a third) and Bangladeshi (almost a half) females in Wales have no qualifications

•

Religious differences are in line with ethnicity findings – highest % of graduates for Sikh/Hindu males, then Buddhists – highest % with no qualifications amongst Muslim females

Variations in Qualifications (Continued) •

Those reporting no disabilities have the highest qualifications – lowest educational outcomes for those reporting they are both DDA and work limiting disabled (almost 40% have no qualifications) – similar to Outer UK but higher % reporting disabilities in Wales

•

Variations by housing tenure also more pronounced in Wales – social renters by far the least likely to be graduates (2% in Wales compared to around 20% in other tenure categories; 6% in LESE) – far more likely to have no qualifications (37% in Wales, compared to 35% in Outer UK and 30% in LESE)

•

Findings with respect to age as expected – higher proportion of graduates and lower proportion with no qualifications amongst more recent cohorts

•

Welsh speakers are more qualified, especially for females

Employment •

Employment status has been broken down into 9 categories

•

Again the APS is mainly used but changes from 1992 to 2010 are also reported using the LFS

•

Large differences reported between males and females in Wales and the rest of the UK – much higher incidence of part-time work amongst females, especially in Wales – males much more likely to be self-employed – high % females looking after family/home – but an increasing proportion of inactive students for both

•

Some evidence of the impact of recessions => higher unemployment in 1992 and 2010

Breakdown of Employment Status for the Working Age Population in Wales Wales Males

1992

2001

2010

Wales Female

1992

2001

2010

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

% working age population

Employed, full-time Self-employed Inactive, student Inactive, disabled/long-term sick Inactive, other reason, no reason given

Employed, part-time ILO unemployed Inactive, looking after family, home Inactive, retired

100%

Key Findings: Probability of Employment •

Lowest employment for those entering or leaving working age – inactivity particularly high for older males due to LT sickness in Wales (25% in 60-64 group compared to 19% in Outer UK and 12% in LESE)

•

Non-employment particularly high for Bangladeshi females – 81% are in this category in Wales; 78% in LESE and 73% Outer UK – also very high for Pakistani females (67% in Wales but lower than in LESE: 70% and Outer UK: 77%) – closely linked with religion but difficult to disentangle ethnicity and religion even in regression framework

•

People with DDA and work limiting disabilities are also highly work disadvantaged: 74% are in not in employment in Wales – greater than in LESE (63%) and Outer UK (68%) – but differentials do narrow in logistic regressions suggesting that education is an important determining factor for this group

Key Findings: Types of Employment •

Self-employment is very high for Pakistani and Bangladeshi males living in Wales

•

Clusters of males and females in Wales in low paying sectors – particularly for part-time workers (over 50% in these sectors) – but also for 23% of full-time females (same as Outer UK but much higher than for males: 11% )

•

Despite rising education, a low proportion of FT female employees in Wales are higher managers or professionals – 9% compared to 15% in LESE and 10% in Outer UK; also lower for males : 15% compared to 26% in LESE and 17% in Outer UK

•

High proportion of females in Wales work in the public sector, especially for full-timers

Earnings in Wales Gerry Makepeace* Victoria Wass* *Cardiff Business School

Earnings and Earnings Inequality • Measured for the 77% who are employed (relatively advantaged) • Largest source of household income

• Key determinant of inequality elsewhere (e.g. health, well being, life expectancy and personal and household achievement) (Wilkinson & Pickett 2008) • Inequality in earnings comprises earnings differences between socio-economic groups and earnings differences within these group • Large increase in inequality since 1980

What does this chapter do? 1. Reference for statistics on earnings in Wales (and different areas of the UK) for different social groups 2. Summary of the distribution of earnings which show levels and dispersion within and between groups

3. Who is disadvantaged in Wales? 4. How much worse off are the disadvantaged in Wales? 5. How big is within-group inequality in Wales?

Measuring earnings • Real gross hourly earnings for all employees (in 2009 prices) • Real gross weekly earnings for full-time employees (in 2009 prices)

• Within and between groups • Personal characteristics gender, age, ethnic group, religious affiliation, disability, Welsh identity and language, education and qualifications

• Job characteristics occupation, LPC-defined low pay group, temporary or permanent employment contract, full- or part-time employment contract, public or private sector and region

The Box and Whisker Plot 10th Median 25th 75th

90th

Real Hourly Wages by Gender in Wales - all employees

Real Hourly Wages by Gender and Region

Returns to qualifications (women) Percentil

2.88

79

Degree

3.25

65

Other HE Qualification

2.84

60

A Levels

2.71

30

GCSE

2.39

28

Other Qualifications

2.15

21

No Qualifications

1.98

17

Higher Degree

2.87

80

Degree

3.28

68

Other HE Qualification

3.01

58

A Levels

2.63

33

GCSE

2.49

29

Other Qualifications

2.27

22

No Qualifications

1.98

17

Higher Degree

3.19

82

Degree

3.69

75

Other HE Qualification

3.10

64

A Levels

3.36

42

GCSE

3.05

39

Other Qualifications

3.10

36

No Qualifications

2.48

23

LESE

Outer UK

Higher Degree

Wales

90:10

0

10

20 30 40 50 Gross Hourly Earnings Females (£s)

60

Disentangling the different effects Wales

LESE

Outer UK

+12%

+13%

+14%

-7%

-7%

-7%

0

-6%

-6%

Degree (HE/A level)

+22% (9%)

+30% (10%)

+27% (10%)

None (low)

-12% (-6%)

-10% (-1%)

-9% (-5%)

Public sector (rel. to private)

+9%

-2.5%

+7%

Permanent job (rel. to temp)

+11%

+10%

+8%

Full-time (rel. to part time)

+7%

+12%

+7%

Males (relative to females)

Age Disability (rel. to non-disabled) Non-white ethnicity (rel. to whites)

Lower peak

Qualifications (rel. to GCSE)

Who are the disadvantaged groups? 1. Young 2. Unskilled and semi-skilled manual and service occupations (SOC 6, 7, 8 and 9) with some exceptions in LESE 3. No and poor qualifications 4. Bangladeshi and Pakistani ethnicity 5. Muslim religious affiliation 6. Temporary workers 7. Women plus all manual and service occupations, disabled, private sector and non-graduates outside LESE

Income, Poverty and Wealth Rhys Davies* Huw Lloyd-Williams** *Cardiff University **Bangor University

Income and Poverty HBAI 2004/08

Total UK

LESE

Outer UK

Wales

90:10

Poverty (%)

Before Housing Costs

3.64

17.5

After Housing Costs

4.48

21.2

Before Housing Costs

3.70

16.6

After Housing Costs

4.42

20.7

Before Housing Costs

4.71

13.2

After Housing Costs

6.24

20.8

Before Housing Costs

4.06

13.5

After Housing Costs

5.01

20.7

-100

100

300

500

700 Incom e

900

1100

1300

1500

LESE

Outer UK

Wales

Poverty by Family Status 90:10

Poverty (%)

Pensioner - Couple Pensioner - Male Pensioner - Female Couple - Children Couple - No Children Lone Parent Single - Male Single - Female

3.65 3.59 3.25 3.98 4.66 3.16 5.66 6.18

16.4 13.7 18.1 18.7 12.6 47.6 25.3 30.4

Pensioner - Couple Pensioner - Male Pensioner - Female Couple - Children Couple - No Children Lone Parent Single - Male Single - Female

3.58 3.41 3.19 4.06 4.39 3.16 6.33 5.50

16.6 13.5 17.4 20.6 11.7 42.7 24.7 24.3

Pensioner - Couple Pensioner - Male Pensioner - Female Couple - Children Couple - No Children Lone Parent Single - Male Single - Female

4.75 4.17 4.07 6.19 5.69 4.13 8.87 7.30

16.3 13.6 18.8 21.1 11.1 48.4 23.1 22.3

0

200

400

600

800 Income

1000

1200

1400

HBAI 2004/08

1600

Poverty by Housing Tenure

Outer UK LESE

Tenure Type

Wales

HBAI 2004/08

90:10

Poverty (%)

Ow ns Outright

4.09

16.1

Buying w ith a Mortgage

3.48

11.1

Renting

3.74

46.4

Ow ns Outright

4.07

14.7

Buying w ith a Mortgage

3.77

12.1

Renting

4.04

41.3

Ow ns Outright

5.44

13.0

Buying w ith a Mortgage

5.31

12.5

Renting

5.89

39.5

0

200

400

600

800 Incom e

1000

1200

1400

In-Work Poverty Wales

Outer UK

LESE

UK

couple - children

14.0

16.5

17.7

16.8

couple - no children

8.9

8.1

8.4

8.3

lone parent

25.7

20.0

24.4

21.7

single male

11.1

10.6

11.2

10.8

single female

14.7

12.4

12.1

12.4

renting

27.9

27.6

26.1

26.9

owns outright

11.0

8.9

8.1

10.2

buying with a mortgage

9.6

10.0

10.6

8.7

12.9

13.1

14.1

13.5

Family Status

Tenure

All

HBAI 2004/08

Poverty Persistence Wales

Outer GB

LESE

Headcount 1999

22.1

20.0

13.7

Exited poverty in 2000

12.8

9.1

7.0

Remained in poverty in 2000

9.4

10.9

6.7

Headcount 2005

18.9

17.0

12.3

Exited poverty in 2006

9.6

8.7

5.3

Remained in poverty in 2006

9.3

8.3

7.0

Headcount 1999

22.1

20.0

13.7

Exited poverty by 2006

17.5

16.1

11.8

Remained in poverty by 2006

4.7

3.9

2.0

1999-2000

2005-2006

1999-2006

BHPS

Wealth by Social Class Managerial & Professional

Wales

Intermediate Small Employers & Own Account Workers Lower Supervisory & Technical

Semi-routine Never Worked & Long Term Unemployed

Managerial & Professional Outer UK

Intermediate Small Employers & Own Account Workers Lower Supervisory & Technical Semi-routine Never Worked & Long Term Unemployed

Managerial & Professional LESE

Intermediate Small Employers & Own Account Workers

Lower Supervisory & Technical Semi-routine Never Worked & Long Term Unemployed -200

200

600 Wealth (£000s)

1000

1400

2006/08 WAS

Summary • Approximately 1 in 5 live in poverty • The groups most susceptible to living in poverty are lone parents, followed by single females • Poverty is also more prevalent in Black and Asian households, households where there is a disabled person present and within the rented sector • Being in work does not necessarily provide a route out of poverty - 13% of those in in-work households live in poverty • The median level of wealth held by households in Wales (approximately £205,000) is comparable to that held by households across the UK as a whole • There is a clear correlation between the accumulation of wealth and social class.

Cross Cutting Summary Caroline Joll* Alison Parken* Victoria Wass* *Cardiff University

What do we do in this chapter? 1. Compare inequality across different financial outcomes

2. Look at experience of disadvantaged groups across outcomes 3. Present key outcomes for groups of interest 4. Pull together key findings and policy implications

Inequality in financial outcomes • Four outcomes: Earnings (hourly and weekly), Income (net

weekly) and Wealth (of households). • Inequality measured by 90:10 ratio • Wealth is by far the most unequal distribution: 90:10 ratio = 90 • 90:10 ratio for income = 4.48, higher than for earnings • Hourly earnings (90:10 = 3.5) are slightly more unequal than weekly earnings of full-time employees (90:10 = 3.4)

Inequality: Wales vs UK 120

100

80

90:10 ratios Wales

60

90:10 ratios UK 40

20

0 Hourly earnings

Weekly earnings

Weekly income

Wealth

Looking at disadvantaged groups in Wales across all possible outcomes Here we ask three questions: A. Which groups are disadvantaged in Wales (compared to the UK)? B. How much worse off are the disadvantaged in Wales? (compared to UK median and to a Wales reference group)

C. How great is within-group inequality in Wales?

Which groups are disadvantaged in Wales (compared to the UK) ? • The most disadvantaged groups in Wales are: Bangladeshi & Pakistani; disabled; social housing occupants; youngest age-band; those with poor qualifications; workers in unskilled service sector occupations. • Typically experience disadvantage across all measured outcomes

• Within each group women are more disadvantaged but size of gender differential is comparatively low.

Bangladeshi and Pakistani Disadvantage in Wales Schooling & labour Market Outcome

B&P in Wales

UK median

% low or no qualifications (highest is GCSE)

68

52

% not employed or in F/T education

46

22

% hourly earnings less than 2/3rd UK median

51

22

% weekly earnings less than 2/3rd UK median

65

22

% poverty (household net income below 60% UK median – includes all Asian households)

44

21

“Gender top-ups” in Wales Disadvantage

% total

% Gender women top up

low or no qualifications (highest is GCSE) at age 35-39

50.9

52.1

1.2

not employed or in F/T education and DDA and WL disabled

73.7

78.9

5.2

hourly earnings less than 2/3rd UK median and disabled

33.2

37.7

4.5

weekly earnings less than 2/3rd UK median aggregate for Wales

27.6

37.6

10.0

weekly earnings less than 2/3rd UK median aggregate for Wales and house owned with a mortgage

21.8

32.0

10.2

hourly earnings less than 2/3rd UK median and Black African and Caribbean ethnicity

21.7

26.4

4.7

How much worse off are the disadvantaged in Wales? • We measure the earnings/income penalty by comparing group median earnings/income to the UK median levels

• These groups have median earnings and/or income below 2/3rd UK median: Bangladeshi & Pakistani, social housing, young (under 24), no and poor qualifications, unskilled service sector and elementary occupations • Bangladeshi & Pakistani in Wales: hourly earnings 66% of UK median; weekly earnings 58% of UK median

How great is within-group inequality in Wales? • A high level of inequality of income (or earnings) within groups indicates that some group members are much better off than others, so the difference between group median income levels is relatively unimportant in accounting for inequality overall. • In general, the level of inequality within groups is only slightly lower than inequality across the whole population.

• But some groups (e.g. social tenants) exhibit low withingroup inequality – in these cases almost all group members have low incomes/earnings so group membership strongly indicates disadvantage .

An Anatomy of Economic Inequality in Wales A report prepared on behalf of the Wales Equality and Human Rights Commission

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