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ASSETnet: Assets and ethnicity network Dr Omar Khan, Head of Policy Research 1 About Runnymede The Runnymede Trust is an independent policy research organisation fighting for racial justice through: High quality research and analysis Engaging communities Influencing policy 2 About ASSETnet Aim is to spread awareness and raise interest • • About asset-building policies among race equality and other organisations About ethnicity among those already committed to asset-building Three elements • • • Social media site (please join!) National workshops/events (UK, Germany, Hungary, Spain, Belgium) Policy conference in Brussels (February 2012) 3 Why Assets Matter: Evidence Assets are far more unevenly distributed in the UK than income • • • • Anywhere from 10–20% of people have no assets at all Wealthiest 1% owned approximately a fifth of the UK’s marketable wealth... Half the population shared only 7% of total wealth Two-thirds of British households in Britain have less than £3000 in nonhousing savings and assets. Housing: • 40% of the total wealth in the UK, or £6875 billion, is held in housing. • In 2003, half the UK population owned only 1% of non-housing assets. • Consequences: less choices, social mobility, ability to provide for children, and social cohesion 4 Why Assets Matter: Ethnicity • 60% of Asian and Black British people have no savings at all, twice the rate for white people. Less diverse too. Household Assets 250,000 200,000 150,000 Household Assets 100,000 50,000 0 White Pakistani Black Caribbean Black African Bangladeshi 5 Why Assets Matter: Arguments • Social mobility: fair life chances as well as efficient markets require more people to have assets • Behavioural: ‘while income feeds people’s stomachs, assets change their minds’ (Sherraden, 1991) • Freedom: Expands choices • Citizenship; people hold a ‘stake’ in their society. Integration/Cohesion Different arguments for asset-building lead to different policies 6 Why Assets Matter: Policies Policies in UK focused on savings and behavioural arguments (start habit). Not redistributive, citizenship or freedom. • • • • • Child Trust Fund, Saving Gateway: scrapped NEST: auto-enrolled pensions scheme for low-income. Growth and security Housing: shared ownership, other schemes Asset inequality and taxation: • No asset-based tax policies for low-income people; tax incentives on ISAs and pensions as asset-based policies for upper income quintiles • Inheritance tax and wealth tax? • Council tax or property tax? Revenue used to provide assets for all? Shared or collective ownership: a variety of policies for everyone to own in (part-)publicly owned institutions or in public goods. Details important. 7 Ethnicity and asset-holding in the UK • Evidence that 60% have no savings • Bangladeshi and African with less than one tenth White British asset-holding • Following slides explain labour market experience • However, might expect migrants to have less • No intergenerational inheritance • Labour market access: social networks, qualifications, (perceived) language • But evidence that British-born BME men more likely to be unemployed than foreign born fathers (Heath and Li) 8 Low income and ethnicity Income poverty rate by ethnicity, 2002-5 White British White Other Indian Black Caribbean Black African Pakistani Bangladeshi 0 10 20 30 40 50 Income poverty rate (%) • • Bangladeshi (65%), Pakistani (55%), White British (20%) Reflects unemployment but also poor quality work 60 70 Self-employment and ethnicity • • • Pakistani and Bangladeshi with highest rates Most British-born groups lower than migrants, except above Discrimination as cause? In recruitment (DWP survey), and progression (RfO research) Proportion of working population in self-employment by ethnicity, 2007 Self-employment (%) 0 White All BME Pakistani Bangladeshi Chinese Mixed Indian Other Black Black African 5 10 15 20 25 30 Ethnicity and self-employment by sector Industry of self-employment by ethnicity (males), 2001 0% 20% 40% Manufacturing Transport 60% 80% 100% Chinese Bangladeshi Indian Pakistani White Black Caribbean Black African DistHotelCater Construction Finance Other • Chinese (72%) and Bangladeshi (63%) much more likely to be in Catering. • Pakistani (36%) and Black African (17%) much more likely to work in Transport . • Higher income volatility, greater chance of business failure, and no employer pensions contribution or other benefits 11 Conclusion: Questions for microfinance • Do we want ‘repeat’ customers? Danger is that lose best clients • • • • • as they build up savings or improve credit score or business skills to get ‘mainstream’ loan. Why people need microfinance: in part because they have no savings or assets Can microfinance institutions develop alternative policies, including short-term AND long-term savings? Should all assets be ‘leveraged’ If focus on self-employment and entrepreneurship, how ensure social protection and rights, in particular pensions? Are we reaching migrants and ethnic minorities, or are they being channeled into particular sectors? 12 Contact us • To discuss our research and work, please contact • Omar Khan • [email protected] • 020 7377 9222 13 BME people and pensioner poverty Risk of pensioner poverty by ethnicity, 2007-8 Risk of pensioner poverty (%) 60 50 40 30 20 10 0 White Pakistani & Black Caribbean Indian Chinese or other Bangladeshi • All (18%), Black Caribbean (30%), Pakistani & Bangladeshi (49%) All Why are BME people poor when older? • Less likely to have pensions… % with private pension White Ethnic minorities 53 39 All Ethnic minorities 75 65 (in employment) % building entitlement to S2P (2005-6) • Less able to compensate with other assets – • Savings • Home ownership % with no savings Black or Black British 63 Asian or Asian British 60 All 33 (2005)