The Scottish Government

« Previous | Contents | Next »

Listen

Indicators of progress: Definitions, data, baseline and trends information

Milestone 14: Reducing the proportion of working age people with low incomes

Indicators

This milestone is measured by two main indicators - relative low income and absolute low income. A third indicator on persistent low income is also being developed and some preliminary results are included at the end of this section.

Relative and absolute low income can be measured using a number of different thresholds. The accepted GB and European Standard ¹ for producing headline indicators of people in low-income households is households with income below 60% of the GB median net equivalised income ². It is also important to consider additional indicators based on a range of thresholds of mean and median income to gain a fuller picture. A full range of indicators is shown in tables 14c to 14f.

Relative low income compares income against the mean or median in the same year. Absolute low income compares income against the mean or median level in 1996/97 in real terms - uprated using the Retail Prices Index. Figures include the self-employed. Relative and absolute thresholds are discussed in more detail in the article "Measures of Low income Amongst Scottish Households".

Availability of data

Data are obtained from the Households Below Average Income (HBAI) analysis. This analysis is based on the Family Resources Survey, run by the Department for Work and Pensions (DWP), which surveys around 2,200 Scottish households each year. The size of the Scottish sample is being doubled as from survey year 2002/03, a measure which will help to reduce the level of sampling variation in the data.

Information is available at Scotland level and can be split by gender. Owing to the current sample size further information on working age people with low incomes cannot be made available at sub-Scotland level, or by age or by ethnicity.

The HBAI analysis uses equivalisation factors to take account of variations in the size and composition of the households in which individuals live. As the equivalisation scale used in HBAI does not take account of the additional costs associated with having a disabled person in the household, any breakdown by disability could be misleading.

Reports for previous years have only contained figures for the proportion and not the number of working age people in low income households - this was as a result of methodological problems with the HBAI data. DWP have now revised their methodology and we are able to provide estimates of numbers of working age people in low income households as well as proportions. As a result of the change in methodology, some of the figures for proportions in Tables 14c to 14f differ slightly from those published in the last report. These differences are, however, very small and do not alter any of the general trends. As part of an ongoing programme to improve data quality, there will be a further revision to this data series when full results of the 2001 Census become available.

Working age people in relatively low income households

Using the headline measure of working age people in households with income below 60% of the median GB household income after housing costs, the proportion in income poverty fell from 20 per cent in 1996/97 to 18 per cent in 1997/98. There have, however, been rises in two of the three years since then, culminating in a proportion of 22 per cent for 2000/01. The broad conclusion is that following an initial decrease, the proportion of working age people in relatively low income households has increased.

Looking across the board at the additional measures presented in Tables 14c and 14d, the proportion of working age people living in households below the given thresholds has risen for all 10 measures since 1996/97, though most of these increases were small and were within the bounds of sampling variation. There has also been an increase for each of the 10 measures between 1999/00 and 2000/01.

Chart 14a: Proportion of working age people living in relatively low income households

Source: Households Below Average Income: Department for Work and Pensions
Note : Defined as working age people in households with income below 60% GB median after housing costs.

Working age people in absolute low income households

Using the headline measure of working age people in households with income below 60% of the median GB household income after housing costs, the figure for 2000/01 is unchanged compared with 1999/00. This does represent a slight fall over the period since 1996/97, although the pattern of change is not consistent year on year. Looking across the board at the measures of absolute low income households, Tables 14e and 14f show that the percentage of working age people living in absolute low income households is lower in 2000/01 than it was in the baseline year of 1996/97 in each of the 10 measures, though some of the measures have fluctuated year-on-year. Since 1999/00, the position is less clear, with 6 of the 10 indicators increasing, 2 staying the same and 2 decreasing. However, all of the changes are within the bounds of sampling variation.

Chart 14b: Proportion of working age people living in absolute low income households

Source: Households Below Average Income: Department for Work and Pensions
Note : Defined as working age people in households with income below 60% GB median after housing costs.

Broad conclusions

The general conclusion is that the percentage of working age people in relative low income households in 2000/01 is slightly higher than in 1996/97. The absolute indicator has fallen by 3 percentage points over the same period, reflecting the fact that both mean and median incomes have risen since then.

Table 14c: Proportion and number of working age people living in households below 50% and 60% of the mean income thresholds in Scotland over the period 1994/95 to 2000/01 relative to the relevant year's GB mean income (Relative measure)

Source: Households Below Average Income : Department for Work and Pensions

Table 14d: Proportion and number of working age people living in households below 50%, 60% and 70% of the median income thresholds in Scotland over the period 1994/95 to 2000/01 relative to the relevant year's GB median income (Relative measure)

Source: Households Below Average Income: Department for Work and Pensions

Table 14e: Proportion and number of working age people living in households below 50% and 60% of the mean income thresholds in Scotland over the period 1994/95 to 2000/01 relative to the 1996/97 GB mean incomes in real terms (Absolute measure)

Source: Households Below Average Income : Department for Work and Pensions

Table 14f: Proportion and number of working age people living in households below 50%, 60% and 70% of the median income thresholds in Scotland over the period 1994/95 to 2000/01 relative to the 1996/97 GB median incomes in real terms (Absolute measure)

Source: Households Below Average Income: Department for Work and Pensions

Gender Analysis

Charts 14g and 14h show how the proportion of working age people in income poverty varies by gender. It should be noted that it is the income levels of the household and not the individual which classes an individual as living in income poverty. For example, in a household with 3 adults, it will either be the case that all 3 adults will be in income poverty or none of them will be. These results are therefore influenced by single adult households or households where all adults are of the same sex.

The charts 14g and 14h show that, generally, working aged women are more likely to live in households in income poverty than working aged men. The main purpose of charts 14g and 14h is to give an indication of the differences between men and women. They are not designed to accurately measure changes over time - the information is based on smaller sample sizes and this may well account for much of the year-on-year fluctuations in the figures.

Chart 14g: Percentage of working age people living in relatively low income households, breakdown by gender

Source: Households Below Average Income: Department for Work and Pensions
Note : Defined as working age people in households with income below 60% GB median after housing costs.

Chart 14h: Percentage of working age people living in absolute low income households, breakdown by gender

Source: Households Below Average Income: Department for Work and Pensions
Note : Defined as working age people in households with income below 60% GB median after housing costs.

Persistent low incomes

Data on the proportion of persons remaining in poverty over a period of time has been obtained from the British Household Panel Survey (BHPS). This annual survey is longitudinal and therefore enables comparison to be made between a person's or household's income position at different points in time. Although the BHPS has been running since 1991, it was only in 1999 that the Scottish sample was boosted to enable more robust Scottish estimates to be produced.

Information published by the Department for Work and Pensions on persistent low incomes gives the proportion who have been in low income households in at least 3 of the previous 4 years. It is our intention, once 4 years worth of boosted Scottish data is available, to replicate this information for Scotland.

Table 14i illustrates the situation for working age people in households in Scotland which were interviewed in both 1999 and 2000, based on the relative household income before housing costs for that year. Please note that, as this information comes from a separate source, the results are not directly comparable with those produced from the HBAI analysis in tables 14c to 14f. The BHPS figures are included to provide an indication of movements in and out of income poverty.

The broad conclusions from Table 14i are:

• Two thirds of working age people were in households which remained outwith income poverty in both 1999 and 2000, while only 7 per cent lived in households which were in income poverty in both years.
• The income poverty status of just over a quarter of working age people changed over the course of a one year period.

Table 14i : Working Age People in Low Income Households in 1999 and 2000

Source: British Household Panel Survey
Notes: Low Income Households are defined using the 60% median before housing costs measure.

Footnotes

1 Recommendation of the Statistical Programme Committee, November 1998.

2 For a detailed description of the methodology used to calculate these figures please refer to the following website: http://www.dss.gov.uk/asd/hbai/hbai2001/contents.html.

« Previous | Contents | Next »