Sunday, 14 November 2010

Work Won't Pay Under Tories

This week saw the detailed announcement of Iain Duncan Smith’s welfare reforms in what equates to the biggest shake-up of the welfare system since the Beveridge Report. According to the BBC, the new programme:
... proposes consolidating the existing 30 or more work-related benefits - including jobseeker's allowance, housing benefit, child tax credit, working tax credit, income support and employment support allowance - into a single universal payment.

... A sliding scale of sanctions will see those refusing work on three occasions having their benefits taken away for three months. Those repeatedly convicted of benefit fraud could have their benefits stopped for three years.
The stated logic behind much of the reforms is sound but its practical implementation, and the rhetoric employed, is fundamentally flawed. Firstly, it makes perfect sense to simplify the current benefit and tax credit system which is jointly administered by two gargantuan and labyrinthine government departments – the Department for Work & Pensions and HM Revenue & Customs. On a purely bureaucratic basis this is a good idea, but the enforcement of a universal credit cannot act as a ‘catch all’ benefit. The current system takes into account the vast diversity of benefit claimants – single parents, care leavers, ex-servicemen, over-50s, the disabled, ex-convicts etc – and any new system must have bespoke variations which respond to individual needs.

Secondly, a key motivation behind the reforms is that “work should always pay and that you should be better off in work that out of work”. Few could disagree with this statement, but the easiest way to incentivise work is to replace the National Minimum Wage with a Living Wage and increase the threshold at which people pay income tax.

Eyes on Power has been a long-term critic of the rhetoric surrounding the unemployed and Smith’s assertion that it is a “sin” that people fail to take up available jobs further demonises benefit claimants. Anyone working with the long-term unemployed will tell you how easily people become demotivated. Claiming benefit for over 6 months whilst submitting tens of applications without response seriously erodes confidence and causes people to disengage. One person I work with “completely lost confidence” after submitting hundreds of applications without reply and, in the end, he “didn’t see the point in applying anymore”. It was only a bespoke government youth employment initiative – the Future Jobs Fund – which allowed him to return to sustainable employment and undertake NVQ training. Under the new system he would have lost his benefit for three years.

The overwhelming majority of unemployed people are desperate to find work but cannot do so because of a lack of employment opportunities or lack of experience and confidence. Resources should focus on training, qualifications, job searching, interview techniques and improving soft skills. This should be given to all jobseekers – not just those ‘easy to help’ as private sector providers do. Furthermore, obliging employers to provide feedback to unsuccessful candidates – however extensive – would help buttress jobseekers’ confidence. The new programme could even have the adverse effect of discouraging employers from recruiting benefit claimants because they perceive them of being forced into work.

The real problem with welfare reform, however, lies in forcing people into unpaid work after a period of unemployment – although the consequences are not entirely undesired by the government. Firstly, the manual nature of the proposed work – road sweeping, litter picking, gardening – is not necessarily appropriate for all jobseekers. Cheap/free labour will have the effect of forcing companies to sack people already employed in these roles and/or forcing down wages and working conditions. There is also the legal consideration of when the National Minimum Wage should be paid as, in effect, claimants would be working for little more than £1 per hour.

There is also a danger that many of the proposed placements are identical to those undertaken by those on probation community orders. This, again, has the effect of equating those on benefits to criminals and furthers the marginalisation and demonisation of those dependent on benefits.

The welfare reforms of the Conservatives and Lib Dems illustrate in whose interest the government serves. 23 members of Cameron’s original cabinet were millionaires – so why would they be bothered about those who can’t rely on family wealth or influential contacts to succeed? . The Coalition’s economic strategy is predicated on private sector growth and welfare reforms such as Iain Duncan Smith’s will have the effect of keeping wages low. From a neo-liberal perspective – and I think there’s little doubt that the Coalition are neo-liberal – the functioning of a capitalist economy relies on a reserve of labour to drive down wages and working conditions. Admitting this, however, would be political suicide and instead the unemployed must be characterised as workshy layabouts and scroungers. There is no reason why people can’t be paid to do these enforced work placements. If the government’s aim is to “make work pay” then they should do exactly that – pay people to work. The Future Jobs Fund has already demonstrated that the money saved on Jobseekers Allowance and Housing Benefit is sufficient to subsidise employment opportunities and, without work available, the government cannot expect jobseekers to remain engaged and motivated.


Natasha said...

Well said. Its good to hear the views of someone who has contact with long-term unemployed people. Reflecting on the fact that the cabinet is made up of millionaires reminds you that they really have no idea of what it means to stuggle to find a job. Although as you suggest, perhaps they don't even care - and that's the real crime.

Anonymous said...

Completely agree. When Future Jobs Fund was introduced, there was much discussion (perhaps only within the industry, rather than in the press) about how to manage it - to ensure employers were not taking replacing existing workers with government funded workers. There has been no such discussion regarding this 'work for your benefit scheme which suggests that this government have no problem with this, or they have no understanding of how the employment market works (I doubt it).

Jackie 1979 said...

I really like your analysis of the underlying capitalist need for low paid work. That's an interesting take on the situation I haven't read anywhere else.

Anonymous said...

Marxist nonsense. If people are taking so much from society then they should pay something back in return.

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