[Economics] HELPING PEOPLE INTO GOOD JOBS RATHER THAN JUST ANY JOB COULD SAVE THE GOVERNMENT BILLIONS

[GL HERO SHIMA]

In recent years, the guiding mantra of the Department for Work and Pensions (DWP) when it comes to supporting people into work has been ‘ABC’ – “Any job first, a Better job next and into a Career”. In reality, the government’s approach is too often pushing people into lower paid jobs that leave many with inadequate and insecure incomes. This ultimately increases the longer-term financial support required from the state, the opposite of what the government has set out to do.

By flipping its approach and focusing instead on supporting people into jobs which are more suited to an individual’s skills, experience and ambitions, the government could not only help people lead more fulfilling and rewarding lives, it could also reinvest significant additional tax revenue and savings from universal credit (UC).

Currently, the progression from ‘any job’ into a better job and then a career is more of an assumption than something the DWP is actively facilitating. People required to attend jobcentre appointments often report a culture where little attention is paid to their longer-term ambitions around work:

“If you’re going out looking for your job yourself, you’re going to pick a better job or one that’s more suited for you. But in the jobcentre, they just tell you to pick as many jobs as possible and apply for them: ‘I don’t care what you do, what your skills are, what you’re interested in. Just apply for them and hit this quota so that I can sign you off and I’ve done my bit and received my pay cheque.’ I feel like it’s very much a numbers game for them because you have to just apply and apply and apply.” – Interviewee in NEF research on women’s experiences of the social security system

Conditionality (the expectations people are required to meet to retain their benefits) explicitly enforces this approach. One condition of receiving support means people are allowed just one month to focus on jobs in their preferred sectors before they are required to apply for any position suggested by their work coach.

The reach of conditionality has been increased over time, including to more single parents through the lone parent obligation. This was declared a success by DWP but has since been shown to have primarily led to low-paid and insecure jobs. Other research indicates that more than half of people (55%) in work and in receipt of UC are in severely insecure work – a combination of elements such as low or variable pay, part-time work and underemployment.

If harsh and prescriptive conditions push people into low-quality, short-term jobs that result in frequent periods out of work, the scarring effects of unemployment can be compounded, reducing future career and living standards prospects. Stress and anxiety from poor interactions with the jobcentre can have a negative impact on people’s mental health, pushing them further from the labour market. Likewise, sanctions that drive people into destitution can further weaken their employment outcomes.

More widely, conditions on benefits can undermine people’s trust in the jobcentre and DWP, reducing the chance of genuine engagement with support. It is likely that this approach is also loosening the lower end of the labour market by making more people search for and take up poorer-paid, less secure and less suitable jobs. This means lower-paid workers have reduced influence over their pay and conditions, suppressing earnings growth and diminishing the returns to government of employment support. 

Changing conditions for low earners

The interactions people have with the benefits system are in flux. The minimum earnings necessary to avoid the threat of sanctions is rising while the time allowed to find the right job has been lowered. Alongside the broad real-terms cuts to working-age social security since 2010, a decade long transformation of social security has seen legacy benefits replaced by UC.

This rollout of UC as the main working-age benefit is almost complete, with the penultimate stage of managed migration, now referred to as the move to UC, expected to end this year. As of December 2023, 520,000 families had been informed they need to apply for UC or risk their support ending. Almost all were in receipt of tax credits. An additional 440,000 notices are expected to be sent by September 2024 to some of the remaining legacy caseload. Approximately 600,000 households in receipt of income-related employment and support allowance (ESA) will be moved onto UC from 2028/29 onwards.

Figure 1: Managed migration is bringing a wave of middle-age adults into the scope of conditionality 

https://neweconomics.org/2024/04/helping-people-into-good-jobs-rather-than-just-any-job-could-save-the-government-billions