Low-wage economy 'creates child poverty'

More than half of the children growing up in poverty have a parent in work because Britain has a low-wage economy, according to a report published today.

Although Labour has lifted 600,000 children out of poverty since taking power in 1997, almost all of them had parents who were unemployed. Some 2.9 million children are still classed as poor because their family's income is less than 60 per cent of the median.

The Institute for Public Policy Research (IPPR), a left-of-centre think-tank, accuses the Government of failing to tackle the problem of "in-work poverty". It will be seen as a criticism of Gordon Brown's flagship tax credits scheme and will call into question Labour's ability to hit its target of abolishing child poverty by 2020.

Despite the Government's efforts to improve social mobility, the IPPR found that many of the 5.3 million workers in low-paid jobs have little prospect of moving up the career ladder and boosting their earnings. The jobs include the wholesale, retail, hospitality, service, sales and customer service sectors.

Today's report calls for a coherent government strategy so that Britain emerges from the recession as a fairer, more socially mobile society. Lisa Harker, the institute's co-director, said: "Low pay and in-work poverty are long-term challenges, and the Government must not let its priorities get blown off course by the recession. Government investment is needed now to strengthen career ladders, improve workplace performance and make sure the welfare system is focused on helping people stay and progress in work."

The report predicts that, without changes in policy, there will be a similar number of low-paying jobs in 2020 as in 2004, due to an expansion of employment in low-paid sectors such as retail, catering and lower-level service posts.