2. Persistent poverty in the UK is lower than the average for the rest of Europe

Figure 1: Persistent poverty in the UK is lower than the average for the rest of Europe

Persistent at risk of poverty rates and at risk of poverty rates, EU28 and other select countries, 2017

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Includes data from EU28 and for other select countries, Norway, Turkey, Serbia and North Macedonia who are not members of the EU. Slovakia’s data for persistent poverty is unavailable.

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This release presents estimates of poverty, and persistent poverty in the UK, and Europe.

The definition of poverty used is at-risk-of-poverty, and people are defined as such if they live in a household with an equivalised disposable income that falls below 60% of the national median in the current year.

Persistent poverty is defined as being in poverty in the current year and at least two of the three preceding years. This type of relative indicator does not measure absolute wealth or poverty, but low income in comparison with others living in the same country, which in itself does not necessarily imply a low standard of living. More information about the definitions of poverty, and the sources used is contained within the Measuring the data section.

In 2017, the persistent poverty rate for the UK was 7.8% – the eighth lowest in the European Union and 3.5 percentage points lower than the EU28 average rate of 11.3%. Among EU member states, Czechia has the lowest persistent poverty rate, while Romania has the highest – 4.4% and 19.1%. France and Slovenia have similar persistent poverty rates to the UK – 8.0% and 8.2% respectively.

In contrast to persistent poverty, the UK’s and EU's poverty rates rate were similar – 17.0% and 16.9% respectively. The UK’s poverty rate is similar to Malta (16.7%) and Portugal (18.3%).

Countries have, for the most part, similar poverty and persistent poverty rates as their neighbours. For example, the Nordic countries (Sweden, Norway, Denmark, and Finland) all have lower than average poverty and persistent poverty rates. The Baltic states (Latvia, Lithuania, and Estonia) and countries in the Balkans (Romania, Bulgaria, North Macedonia and Serbia) all have higher than average poverty and persistent poverty rates. One exception is Czechia, which has lower poverty and persistent poverty compared with neighbouring countries.

Figure 2: UK’s persistent poverty rates are relatively stable between 2008 to 2017, while the EU average has increased Poverty and persistent at risk of poverty from 2008 to 2017 in the UK and EU28 Source: Eurostat, Office for National Statistics Download this chart Figure 2: UK’s persistent poverty rates are relatively stable between 2008 to 2017, while the EU average has increased Image .csv .xls

Between 2009 and 2017, the UK’s overall poverty rate is broadly comparable with the average of EU member states, both fluctuating between 15.9% and 17.3%. In contrast, the UK persistent poverty rate was lower than the EU average over the same period. While the UK has remained at a broadly similar level (8.5% in 2008 and 7.8% in 2017), the EU average has been slowly rising over the decade. This has led to a widening gap over the long-term, so that in 2017 the EU persistent poverty rate was 3.5 percentage points higher than the UK’s (Figure 2).

This relationship between rates of persistent poverty and overall poverty can be most clearly seen when considering the ratio between the two rates expressed as a percentage (Figure 3). A ratio of 50% would suggest that half of those currently in poverty were also poor in at least two out of the last three years.

Figure 3: Poverty in the UK tends to be more temporary compared with other European countries. Proportion of those in poverty who are persistently in poverty, UK and EU28 countries Source: Eurostat, Office for National Statistics Notes: Excludes Slovakia as their persistent poverty rates are unavailable. Download this chart Figure 3: Poverty in the UK tends to be more temporary compared with other European countries. Image .csv .xls

In 2017, 46% of the people in the UK who were in poverty were also in persistent poverty. This is the sixth lowest of EU member states and 21 percentage points below the EU28 average (67%). This indicates that people in poverty in the UK are relatively more likely to exit poverty quickly, rather than it being a longer-term phenomenon. In this regard, the UK is similar to Sweden and Czechia, although in Czechia individuals are overall less likely to enter poverty. Cyprus has the lowest proportion of individuals in poverty and persistent poverty (42%), while Romania has the highest (81%).

Poverty entry and exit rates provide useful insight into transitions in and out of poverty, and can reflect the changes those with low incomes can experience. Poverty entry rates are defined as the proportion of population that enter poverty each year, while the exit rates show the proportion of those in poverty who exit poverty each year.

Figure 4: Poverty entry rates in the UK have been broadly stable over recent years, while the exit rates have declined Poverty entry and exit rates for the UK, 2008 to 2017, percentage of individuals Download this chart Figure 4: Poverty entry rates in the UK have been broadly stable over recent years, while the exit rates have declined Image .csv .xls

In 2017, the UK’s poverty entry rate was 8.6%, while the exit rate was 41.8%. Entry rates have been steady between 2008 and 2017. Typically, the poverty exit rate has been above 40% since 2008 and was closer to 50% between 2011 and 2014. Since 2014, the exit rate has declined and is at its lowest point since 2008 in 2017, indicating that people experiencing relative low incomes are less likely to exit poverty than they were for most of the previous decade.

As there are fewer people in poverty than not in poverty, it is expected that exit rates expressed as a percentage of those in poverty would be higher than entry rates as a percentage of those not in poverty. Small changes in the number of people in each case would equate to a much larger percentage change for those in poverty.

Figure 5: Most individuals remain in the same work and poverty status in 2017

Transitions between work status and poverty status, 2016 to 2017, UK, percentage

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Number of people in each transition available via csv and xls download (Rounded to nearest 100,0000).

Figure 5 highlights the proportion of people in each type of work and poverty status in 2016 and 2017, as well as the transitions between them (see glossary for definition of work status). In 2016, 42% of the population were both in-work and not in poverty, falling by 1 percentage point to 41% in 2017.

Overall, 79% of individuals remained in the same work and poverty statuses in 2017, mainly driven by the 37% of people who stayed in work and out of poverty for both years.

Looking in more detail, the majority (62%) of those who were in child poverty in 2016 were also in poverty the following year, while 38% left poverty in 2017. Conversely, 13.1% of those children who were not in poverty in 2016 were in a household with relative low income the following year.

Of those who were in in-work poverty in 2016, around half – equivalent to 1 million people – left in-work poverty the following year, while the rest remained in in-work poverty in 2017.

Exploring further those who enter poverty, the largest amount (29.8%) are dependent children (in both years), closely followed by in-work adults (26.2%). While the majority of transitions (89%) were people who stayed within their original work status, 4.2% moved from in-work to out-of-work, and 1.8% from retired to being in-work.

Similarly, the largest amount of those exiting poverty (26.5%) were dependent children, followed by those who remained in-work (26.3%). Fourteen per cent of people who exited poverty, entered work from being out-of-work – the largest proportion out of those who exited poverty, and changed their work status.

There are multiple ways in which a person can exit in-work poverty, and often these factors can occur simultaneously. Figure 6 examines different circumstances such as people increasing their hours or pay or both, either in their current job or in a new job. The “Other” category denotes circumstances not captured, such as changes to the composition of the household, changes in the income from sources other than employment, or increased earnings from another household member.

Figure 6: Employees keeping the same job and number of hours, but increasing their hourly pay is most frequent reason for exiting in-work poverty Proportion of people exiting in work poverty by reason, 2016 to 2017, UK Source: Office for National Statistics Notes: An increase in hourly earnings refers to a nominal increase of 5% or more. An increase in hours worked refers to an increase of 5% or more. Download this chart Figure 6: Employees keeping the same job and number of hours, but increasing their hourly pay is most frequent reason for exiting in-work poverty Image .csv .xls

Figure 6 shows that 44% of people exited in-work poverty due in increases in their hourly pay, without a significant change in the hours they worked, while remaining in the same job. The majority of people who exited in-work poverty were those who stayed within the same job – 81%.

While assessing living standards in terms of looking at households with relative low income, it is also useful to expand the focus on other measures. For example, income tends to be volatile and, as such, it may not adequately reflect an individual’s well-being. For example, short-term unemployment or sickness may cause a temporary reduction in income, which will not necessarily be matched by a corresponding drop in consumption or well-being. Similarly, more systematic lifetime fluctuations that lead to a reduction in income may not adversely affect their consumption, as people might be spending their wealth, for example.

Severe material deprivation describes the proportion of individuals in the population who are unable to afford four or more items considered by most people to be desirable or even necessary for everyday life. More information on these items are contained within the Glossary. Similar to poverty and persistent poverty, if someone is in severe material deprivation for the current and two of the three previous years, then they are in persistent severe material deprivation.

The severe material deprivation and persistent severe material deprivation rates were 4.1%, and 2.1% respectively in 2017. This suggests that just over half of those who are in material deprivation are in persistent material deprivation. For those in poverty, as a comparison, under half of them were also in persistent poverty.

Figure 7: Severe material deprivation and persistent severe material deprivation have fallen in recent years Severe material deprivation and persistent severe material deprivation rates, 2008 to 2017, UK Source: Eurostat, Office for National Statistics Download this chart Figure 7: Severe material deprivation and persistent severe material deprivation have fallen in recent years Image .csv .xls

Material deprivation has decreased by nearly 1 percentage point each year in the last four years, falling 4.2 percentage points from 8.3% to 4.1% in-between 2013 and 2017. Persistent material deprivation has been on a downward trend since 2015, after increasing from 2008 although at a slower rate, falling 1.5 percentage points from 3.6% to 2.1%.

Figure 8: People who are in persistent poverty are more likely to be materially deprived and persistently material deprived Material deprivation and persistent material deprivation by poverty status of individual, 2017 Source: Office for National Statistics Download this chart Figure 8: People who are in persistent poverty are more likely to be materially deprived and persistently material deprived Image .csv .xls

Poverty and persistent poverty rates are positively associated with severe material deprivation. In 2017, of those who were in poverty, 13.2% of individuals were severally materially deprived, while 7.3% were in persistent material deprivation. While, out of those who were persistently in poverty 18.5% of them were also in material deprivation and 10.4% were in persistent material deprivation. Those who were not in poverty had a lower material deprivation with 2.3% of individuals being in material deprivation, while 1% were in persistent material deprivation.

Figure 9: 33% of population can’t afford an unexpected expense Proportion of individuals who meet a material deprivation condition, percentage UK 2017 Source: Source: Office for National Statistics Download this chart Figure 9: 33% of population can’t afford an unexpected expense Image .csv .xls

Figure 9 highlights the proportion of individuals who have an enforced lack of each material deprivation item defined in the Glossary. A third of people cannot face unexpected expenses, while 23.7% cannot afford a one-week annual holiday.