The south Wales valleys are hugely deprived

A conference in Cardiff on Friday was told how great strides have been made in tackling unemployment but that large numbers of people remain out of work through sickness.

The problems to be tackled have been outlined in a report by the think-tank the Institute of Welsh Affairs (IWA), as part of a UK wide study on beating poverty.

It was presented at the Cardiff launch of Overcoming Disadvantage - a report by the social policy research charity, the Joseph Rowntree Foundation.

The report features a number of potential long-term solutions proposed by five leading think-tanks.

Example of Welsh poverty : Merthyr Tydfil 66% of homes have less than �10,000 a year 48.6% of people are in employment 28% of homes get housing benefit 29% of homes are owned by councils or housing associations 13.6% of homes have one parent 12.5% of homes are not fit for habitation 44% of16-60-year-olds have no qualifications 30% of people suffer from long-term illness Source: Assembly Government, Mapping social exclusion in Wales, 1999; 2001 census

It has been specially commissioned to mark the start of the foundation's centenary year.

The report recognises that over the past five years the number of jobs created in Wales has risen rapidly.

But high levels of chronic sickness and other economic problems mean that the number of people living in poverty in Wales is still above the UK average.

The report claims that the Welsh Assembly Government has taken a lead in tackling the problems. It says the Communities First schemes - set up to help the most deprived areas - can teach important lessons to other areas.

But it also suggests that the situation could be improved by empowering local people to find solutions to local problems.

The research has been welcomed by the Welsh Assembly Government.

The Joseph Rowntree Foundation hopes it will form a part of a new approach to tackling poverty over the next 20 years.

John Osmond, the IWA's Director and co-author of the report, said: "On the surface in Wales, unemployment appears to have reached tolerably low levels, but when combined with sickness and disability claimants, the proportions not working are higher than almost anywhere else in the UK.

"There are pockets of extreme poverty throughout. The valleys pose particular problems, with their legacy of ill-health, low skill levels and low employment activity rates, but there are also concentrations of poverty along the North Wales coastline, in south Pembrokeshire and in parts of Cardiff, Newport and Swansea."

Mr Osmond said a new approach was needed to find a solution.

"The location and scale of these problems mean they are unlikely to be tackled effectively by the conventional means of attracting inward investment or persuading private firms to move in and provide jobs," he said.