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ASSETnet: Assets and ethnicity network

Dr Omar Khan, Head of Policy Research

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About Runnymede

The Runnymede Trust is an independent policy research organisation fighting for racial justice through:

High quality research and analysisEngaging communitiesInfluencing policy

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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)

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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 non-housing

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

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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.

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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

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Why Assets Matter: PoliciesPolicies 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.

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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)

Low income and ethnicity

0 10 20 30 40 50 60 70

Bangladeshi

Pakistani

Black African

Black Caribbean

Indian

White Other

White British

Income poverty rate (%)

• Bangladeshi (65%), Pakistani (55%), White British (20%)• Reflects unemployment but also poor quality work

Income poverty rate by ethnicity, 2002-5

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

0 5 10 15 20 25 30

White

All BME

Pakistani

Bangladeshi

Chinese

Mixed

Indian

Other

Black

Black African

Self-employment (%)

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Ethnicity and self-employment by sector

• 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

Industry of self-employment by ethnicity (males), 2001

0% 20% 40% 60% 80% 100%

Chinese

Bangladeshi

Indian

Pakistani

White

Black Caribbean

Black African

DistHotelCater Manufacturing Transport Construction Finance Other

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?

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Contact us• To discuss our research and work, please

contact

• Omar Khan• omar@runnymedetrust.org • 020 7377 9222

BME people and pensioner povertyRisk of pensioner poverty by ethnicity, 2007-8

0

10

20

30

40

50

60

White Pakistani &

Bangladeshi

Black Caribbean Indian Chinese or other All

Risk

of p

ensio

ner p

over

ty (%

)

• All (18%), Black Caribbean (30%), Pakistani & Bangladeshi (49%)

Why are BME people poor when older?

White Ethnic minorities

% with private pension (in employment) 53 39

All Ethnic minorities

% building entitlement to S2P 75 65

% with no savings

Black or Black British 63

Asian or Asian British 60

All 33

• Less likely to have pensions…

• Less able to compensate with other assets – • Savings• Home ownership

(2005-6)

(2005)