Income and employment: introduction

Income and employment are key 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 POVERTY

Income 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, employment and other goods and environment (e.g. housing, transport), with likely further positive impacts on health.

Measuring and describing income poverty

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

  1. Relative and absolute poverty - defined as 60% of median income, adjusted for household size and composition. Relative is <60% current median, adjusted for HH size. Absolute is measured as <60% of median in 2010/11, adjusted for inflation. Mack (2016).
  2. Persistent income. The Scottish Government measures considers someone in persistent poverty if they have been in relative poverty for at least three out of the last four years. 
  3. Material deprivation. A child is classified as being in combined low income and child material deprivation if they live in a family that is lacking 4 or more items from a list of 22 and has a household income below 70% of the median. A pensioner is defined as being in material deprivation if they are lacking 4 or more items from a list of 19.  A working-age adults is defined as being in material deprivation if they are lacking 5 or more items from a list of 21.  
  4. 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. 

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 latest report of the Social Metric Commission was published in 2024. 

Poverty

Using the 60% of median income measure, 20% of the Scottish population (1.07 million people) were living in relative poverty in 2021-24 after housing costs.  

Using this definition, the poverty rate in 2021-2024 was 23% for children, 20% for working age adults and 15% for pensioners.

In 2021-24, 61% of working age adults and 75% 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

Couples without children where both work full time on the national minimum wage will achieve the Minimum Income Standard (MIS).

All other working-age household types – lone parents, couples with children and single adults without children – will fail to achieve the MIS, even where all adults in the household are working FT on the national minimum wage.

State Pension and Minimum Income Standard

Single pensioners with income only from the State Pension or Pension Credit would reach 94% of the 2024 MIS of £236 pw for a single pensioner household.

Benefits and poverty

In December 2024, there were 587,610  people claiming Universal Credit in Scotland.

There were also 6,300 households in Scotland claiming tax credits (December 2024) and 170,882 people claiming Employment and Support Allowance (August 2024). 

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 2024 out of work benefits plus cost of living payments covered just 28% of what a single-working age adult, 27% of a working-age couple without children, 44% of what a lone parent and 39% of what a couple with two children, would need to achieve the Minimum Income Standard.

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 and remaining 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 2024, 552,395 people aged 16-64 were claiming out-of-work benefits* in Scotland (DWP Stat Xplore). 

There are around 115,735 adults aged 16-64 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. 

* 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).

 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). 

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

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 December 2024, there were 3,200 working families claiming tax credits and 202,895 individuals in work claiming Universal Credit (DWP Stat Xplore) in Scotland. 

In 2021-24, after housing costs, 410,000 working-age adults and 180,000 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.