Key points

  • Around two-fifths of people from ethnic minorities live in low-income households, twice the rate for White people.
  • Within this, there are big variations by ethnic group.  More specifically, the proportion of people who live in low-income households is:
    • 20% for White people.
    • 30% for Indians and Black Caribbeans.
    • 50% for Black Africans.
    • 60% for Pakistanis.
    • 70% for Bangladeshis.
  • The proportion of people from ethnic minorities who live in low-income households declined during the late 1990s and early 2000s but has been rising since then.  The net result is that the proportion in 2008/09 was lower than that of a decade previously, but only by a bit.
  • Each ethnic group has seen a similar (small) fall over the last decade in the proportion of people from ethnic minorities who live in low-income households.  The net results are a) that the gap between the proportion for ethnic minorities and that for White people is the same as a decade ago and b) that the ethnic groups with the greatest risk of low income are the same as a decade ago (i.e. Bangladeshi and Pakistani).
  • For all ages, people from ethnic minorities are, on average, much more likely to live in low-income households than White people.  For example, almost half of all children from ethnic minorities live in low-income households compared to a quarter of White British children.  The differences are, however, less for pensioners than for either children or working-age adults.
  • For all family work statuses, people from ethnic minorities are, on average, more likely to live in low-income households than White people.  Whilst these differences are relatively small for workless families, they are proportionally much bigger for working families.  In particular, part-working families from ethnic minorities are almost twice as likely to be in low income as part-working White British families: 45% compared to 25%.
  • Among those in working families, around 65% of Bangladeshis, 50% of Pakistanis and 30% of Black Africans are in low income.  These rates are much higher than those for White British (10%), White other, Indians and Black Caribbeans (all 15-20%).
  • In all parts of the country, people from ethnic minorities are, on average, more likely to live in low-income households than White British people.  The differences are, however, much higher in inner London and the English North and Midlands than in the rest of the United Kingdom.
  • Although, overall, the rate of low income is much higher in London than in the rest of the country (see the indicator on location of low income), the rate of low income for White British people in London is actually similar to that in the rest of the United Kingdom.
  • More than half of people living in low-income households in London are from ethnic minorities.  This is as a result of the high proportion of people from ethnic minorities in London who are in low income combined with the high proportion of the total population in London who are from ethnic minorities.
  • For a discussion of the reasons for the differences in poverty rates between ethnic groups, see the 2007 report entitled Poverty among ethnic groups: how and why does it differ?  The main conclusion of this report is that around half of the differences are due to differences in family composition and work status but that the other half of the differences must be due to other factors such as the prevalence of low pay.

Why this indicator was originally chosen

Most ethnic minorities have a high proportion of their population in low income.

Definitions and data sources

The first graph shows the proportion of people from ethnic minorities living in low-income households  and how this compares to the equivalent proportion for White people.

The second graph shows how the proportion of people living in low-income households varies by different ethnic groups, with the ethnic groups shown being those for which sufficient data exists to derive a reasonably reliable estimate.

The third graph shows how the proportion of people living in low-income households varies by age group, with the data shown separately for those from ethnic minorities and White British people.

The fourth graph shows how the proportion of people living in low-income households varies by family work status, with the data shown separately for those from ethnic minorities and White British people.  The following work statuses are shown: all working (single or couple, with one in full-time work and the other – if applicable – in full-time or part-time work); part working (couples where one is working and the other is not plus singles or couples where no one is working full-time but one or more are working part-time); workless – unemployed (head or spouse unemployed) and workless – economically inactive (includes long-term sick/disabled and lone parents).  The self-employed and workless families aged 60 and over are excluded from the analysis.

The fifth graph shows, for working families only (both ‘all working’ and ‘part working’), how the proportion of people living in low-income households varies by ethnic group.  Again, the self-employed are excluded from the analysis.

The sixth graph shows how the proportion of people living in low-income households varies by geographic area, with the data shown separately for those from ethnic minorities and White British people.  The geographic areas shown are inner London, outer London, the English North and Midlands (i.e. the regions North East, North West, Yorkshire & the Humber, East Midlands and West Midlands), and the rest of the United Kingdom.  Inner and outer London are shown separately because they each have a relatively high ethnic minority population.  The English North and Midlands are shown separately because the proportion of their ethnic minority population who live in low-income households is much higher than in the rest of the United Kingdom.

The seventh graph shows, for each of the geographic areas above, the proportion of people in low-income households who are from ethnic minorities.

The data source for all the graphs is Households Below Average Income, based on the Family Resources Survey (FRS).  For 2002/03 onwards, the data relates to the United Kingdom whilst the data for earlier years is for Great Britain (FRS did not cover Northern Ireland until 2002/03).  Income is disposable household income after deducting housing costs and the low-income threshold is the same as that used elsewhere, namely 60% of contemporary median household income.  All the data is equivalised (adjusted) to account for differences in household size and composition.  Note that in 2007 DWP made some technical changes to how it adjusted household income for household composition (including retrospective changes) and, as a result, the data is slightly different than previously published figures.

Both the definition of ‘ethnic minority’ and the division between different ethnic minority groups is driven by the data.  In the first two graphs, the White grouping includes both ‘White British’ and ‘White other’ as the data prior to 2001/02 does not distinguish between the two.  In the other graphs, ‘White other’ are included in the ethnic minority figures.

The term ‘household’ is used to cover everyone living in a dwelling whereas the term ‘family’ is used to cover an adult and their spouse (if applicable).  So, a young adult living with their parents would count as one ‘household’ but two ‘families’.  Note that an alternative – and more technically correct – term for ‘family’ is ‘benefit unit’.

To improve its statistical reliability, the data in the second to fourth graphs is the average for the latest three years.

Overall adequacy of the indicator: medium.  The FRS is a well-established annual government survey, designed to be representative of the population as a whole, but both the ethnic classification and sample sizes limit what analyses can be undertaken.

Relevant 2007 Public Service Agreements

Overall aim:  Halve the number of children in poverty by 2010-11, on the way to eradicating child poverty by 2020.

Lead department

HM Treasury.

Official national targets

Reduce by a half the number of children living in relative low-income by 2010/11.

Other indicators of progress

Number of children in absolute low-income households.

Number of children in relative low-income households and in material deprivation.

Previous 2004 targets

Halve the number of children in relative low-income households between 1998/99 and 2010/11, on the way to eradicating child poverty by 2020, including:

  • reducing the proportion of children in workless households by 5% between spring 2005 and spring 2008; and
  • increasing the proportion of parents with care on Income Support and income-based Jobseeker’s Allowance who receive maintenance for their children by 65% by March 2008.

By 2008, be paying Pension Credit to at least 3.2 million pensioner households.  While maintaining a focus on the most disadvantaged by ensuring that at least 2.2 million of these households are in receipt of the Guarantee Credit.

The numbers

Graph 1

Year White Ethnic minorities
1994/95 23% 48%
1995/96 23% 48%
1996/97 24% 51%
1997/98 23% 47%
1998/99 23% 44%
1999/00 22% 45%
2000/01 23% 43%
2001/02 21% 41%
2002/03 21% 41%
2003/04 20% 41%
2004/05 19% 37%
2005/0620% 40%
2006/0720% 41%
2007/0821% 39%
2008/0920% 43%

Graph 2

Ethnic group 1996/97 to 1998/99 2006/07 to 2008/09
White23% 20%
Indian 32% 29%
Black - Caribbean 40% 32%
Black - African 54% 48%
Pakistani 64% 57%
Bangladeshi 78% 72%

Graph 3

Group White - British Ethnic minority
Children 27% 48%
Working age 19% 33%
Pensioners 17% 28%

Graph 4

Group White - BritishEthnic minority
All working 5% 9%
Part working 24% 45%
Workless - unemployed 60% 71%
Workless - economically inactive 73% 80%

Graph 5

White - British11%
White - other19%
Indian 21%
Black - Caribbean 17%
Black - African 32%
Pakistani 48%
Bangladeshi 65%

Graph 6

Group Risks
White -  BritishEthnic minority
inner London21% 40%
outer London21% 34%
English North and Midlands21% 41%
rest of the United Kingdom19% 31%

Graph 7

Group Shares
White -  BritishEthnic minority
inner London31% 69%
outer London48% 52%
English North and Midlands81% 19%
rest of the United Kingdom87% 13%