This report extends our earlier work by looking at the relationship between poverty and the workforce. It utilises data released by the Australian Bureau of Statistics in the unit records from the 1981-82 Income and Housing Survey. Although the position of the labour market has deteriorated considerably since then, the report brings together an extensive analysis of these data and discusses the implications of subsequent labour market developments. The report thus draws together work on poverty and the broader question of the social welfare implications of labour market changes. The recognition that the alleviation of poverty can only come about in a sustainable way through wider access to employment opportunities has been long-standing in Australia. The Commission of Inquiry into Poverty noted in its first Main Report released in 1975 that 'the dominant factor which determines poverty is whether or not the head of the income unit is able to work' (p.16). The current report emphasises the relevance of this observation to the situation prevailing a decade after the work of the Poverty Commission. The need to recognise the central role of employment and labour market policies aimed at maintaining high employment levels is as pressing now as it ever was. Full employment must be seen as a major objective of both economic and social policy. Fresh emphasis to these concerns has been given by recent government policy initiatives aimed at developing a more effective integration of income support and labour market policies. The need to continue on this path has been reinforced in the recently released Social Security Review Issues Paper, Income Support for the Unemployed in Australia: Towards a More Active System. Although this report was prepared prior to the Social Security Review's paper, I hope that it will contribute to the debate which promises to have a major bearing on the development of income support and labour market policies appropriate for Australia in the 1990s and beyond.