Punishing the poor
George Osborne is to open the Conservative Party conference today with a promise to further tighten benefit conditionality and introduce workfare style responsibilities for the longer-term unemployed. His leaked speech is quoted in the press today as including the following comment:
“For the first time, all long-term unemployed people who are capable of work will be required to do something in return for their benefits to help them find work…But no one will get something for nothing. Help to work – and in return work for the dole.”
This is apparently popular with the public. Polling evidence from a number of sources, not just the right wing Policy Exchange think tank that is cited in this morning’s press, continues to suggest that the public support more draconian conditions on the unemployed.
The problem with this is four-fold. First, there is no evidence that workfare is effective, and on the contrary may be damaging to employment chances. Second, increasing competition among the unemployed for low quality work may have negative economic effects (as I blogged about two weeks ago in response to ONS international productivity figures) as well as damaging effects on the wellbeing of unemployed jobseekers, making them less likely to be able to work. Third, public support for further welfare cuts is more mixed than the figures at first reveal and is based on misinformation of the sort that occupies today’s media and the Chancellor’s speech. Finally, when this is taken together – and Osborne knows all this – the only possible reason for continuing to talk about, let alone implement, further welfare cuts, is to punish the poor and sick.
First then to the evidence. A review of the international comparative evidence on workfare conducted by researchers at Sheffield Hallam University for DWP in 2008 concluded that:
“There is little evidence that workfare increases the likelihood of finding work. It can even reduce employment chances by limiting the time available for job search and by failing to provide the skills and experience valued by employers.”
Paul Gregg, who advised the previous government on the establishment of the Employment and Support Allowance, also conducted a review of the available evidence on Workfare and argued that it could result in ‘lock-in’ effects preventing people from accessing opportunities in the labour market. This is not to say that no scheme that boosts jobseeker’s work experience, confidence and motivation while unemployed can work. It is just that the specifics of workfare: work for your dole, is not shown by research evidence to be effective, and it might be damaging.
Second, I blogged last week about international productivity comparisons. Britain falls behind some of its competitors on productivity measures. Part of the reasons for this is that since the Thatcherite restructuring of the 1980s the UK economy has had a low wage / low value added problem. Measures which simply provide employers with an ever-ready supply of cheap labour and no incentive to retain, train and invest in their workforce and fixed capital have a dampening effect on productivity. The current approach to welfare is just this.
The September labour market statistical analysis shows that there are two and a half unemployed people, around one and a half million people who are working part time because they cannot find full-time work (ie they are under-employed), and a further two million who are economically inactive for reasons of sickness, some of whom may well be discouraged workers. Set against this there are around half a million vacancies. Even accepting that vacancies are often under-reported in official statistics, this suggests that there are more people wanting jobs than there are jobs available.
The effect therefore of pushing ever more people to compete for those jobs is to further depress wages and leave many of those who are forced to compete for work even more discouraged because they had very little chance of success in the first instance. What is needed for these jobseekers is support to build their skills and confidence, not punitive measures and negative political rhetoric.
Third, it is true that public opinion polling shows support for harsher welfare measures. However, if you look beyond this headline data a slightly different and more complex pattern emerges. First, this is a long-term trend. As politicians have become more willing to direct political rhetoric at benefit recipients, so public opinion has hardened toward them. Second, as a TUC study shows, the public is badly misinformed about welfare spending in relation to the comfort of life on benefits and the level of spending on out of work benefits as opposed to pensions and in-work benefit payments to subsidise low wages. In 2011-12 Government spent nearly £75bn on pensions and £30bn on tax credits to low paid families. In the same year Jobseekers Allowance amounted to just under £5bn and the combination of Employment Support Allowance, Incapacity Benefit and Income Support (all paid for different reasons of not being able to work such as ill-health or child care responsibilities) accounted for just short of £17bn (see the data here). What’s more, the propensity to misunderstand the level of welfare spending is positively related to the likelihood of reporting harsh views toward benefit recipients. Further, the TUC research continues to show considerable support for the general principle of the state helping the least well off. Public opinion, when well informed by mature and reasoned debate is much more supportive of welfare than we are led to believe by populist portrayals by media and politicians alike.
So if the evidence base does not stack up, why is Osborne pursuing this agenda? It could be explained if he was simply naive and didn’t know what the evidence suggested, but he is surrounded by advisers and the DWP’s enormous collection of research. The uncomfortable suspicion remains then that Osborne is simply punishing the poor, for a set of economic conditions for which they are not to blame.
What is needed instead are policy interventions motivated by solidarity with the least well off in society to tackle barriers to work in a supportive environment, build confidence and work experience, but without further cheapening labour or demonising recipients. Design and language matter. Schemes that encourage rather than force participation, support training, tackle barriers to work and genuine help in looking for sustainable employment matched to capabilities and aspirations are all to be preferred to the simple and all too easy ‘dog whistle’ politics of populism.
Additional references:
Crisp, R. and D. R. Fletcher (2008). A comparative review of workfare programmes in the United States, Canada and Australia. Norwich, DWP.
Gregg, P. (2009). “Job Guarantee: evidence and design.” Research in Public Policy 8: 11-13.
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