Fair Workfare?

This week several objections to the government’s Work Programme have been bandied about. This wheeze gives job seekers an unpaid work experience placement. If they drop out then they lose their benefits.

I don’t want to get into the philosophical arguments about whether the principle behind losing benefits is right or wrong; the way the Coalition sees it is that if you get Job Seekers Allowance (JSA), you don’t get it for free so you’re expected to take work that is given to you. I should imagine Labour would broadly agree.

Instead I want to look at the relative merits of these objections to the Work Programme and suggest that it could be resolved by actually paying people.

Here are the objections outlined in this article:

  1. There are “complaints that jobseekers are being used as taxpayer-subsidised labour”. I’m not sure whose complaints the Guardian are referring to here, but I don’t think it’s the same majority of public opinion who support welfare reform and oppose taxpayer-subsidised indolence. If we’re going to have subsidies, it’s probably better that they support labour.
  2. Private sector employers get to profit from the unemployed. Surprisingly (to me), until recently only public sector and charity organisations took people on under the programme. Having the private sector involved is surely essential: if you want the private sector to deliver economic growth you have to prepare the unemployed to fill private sector jobs – whenever they actually get created. However, it does look a bit shabby if corporations are using free labour as a way to enrich themselves. You might call it predatory capitalism.
  3. It’s not actually voluntary if people lose their benefits. Tesco feels uncomfortable with the work experience being compulsory and sold as voluntary (Work Minister Chris Grayling: “Our work experience scheme is voluntary”) and suggests removing the threat of benefit withdrawal. Without wishing to get into a discussion of whether there should be unconditional social security, my interpretation of JSA is that when you sign on you accept its conditions, and you are therefore compelled to take work experience.
  4. It’s slave labour. If you help out an organisation for free because you enjoy doing so and you agree with its objectives and it was entirely your decision to do so, then it’s voluntary. If the activity is anything else – and especially if it was arranged by the JobCentre or whichever contractor is doing it in your area – then it’s work, and you should expect to be paid at least the National Minimum Wage for it. If an unscrupulous retailer finds that they’re able to get a kid on JSA to perform a menial job that requires no training for free rather than actually employ someone then that does nothing for the unemployment rate and undermines the concept of the minimum wage.

What I don’t understand is why people on the Work Programme do not get their benefit topped up to the minimum wage by the employer for the work they do. I think this solution would address all the objections we’ve heard:

  1. Taxpayer’s money is still used to subsidise work not indolence
  2. Employers still get benefits but not at the benefit recipient’s expense
  3. With the minimum wage carrot now complementing the stick of losing benefits, the scheme would still be compulsory, but the DWP would not lose any more friends by saying so – to suggest that the current system is otherwise is disingenuous
  4. While it may still be forced, it isn’t slave labour

There is an issue in that economic theory suggests that you won’t get as many placements as you do under the scheme to date, but at least participating companies won’t be embarrassed into withdrawing completely, thus reducing the number of placements anyway.

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2 Responses to “Fair Workfare?”

  1. Katie schmuecker Says:

    Hi dan,
    Good article! ippr north has been tracking the rising unemployment stats in the north and arguing for a jobs guarantee in the hardest hit places. This would be a six month job at the minimum wage that job seekers out of work for a year or more would be obliged to take or lose their benefit.

    Like your suggestion of firms topping up jsa to the minimum wage, could be a good way of delivering our guarantee.

  2. danwilsoncraw Says:

    Thanks Katie – good to hear from you.

    This is causing a bit of a stir over at the Young Fabian blog:
    http://www.youngfabians.org.uk/blog/index.php/2012/02/22/ways-out-for-workfare/

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