The lesson from Poundland: work pays
The UK government is in a muddle over employment schemes, says Tim Harford
‘Ministers are trying to get back-to-work schemes on track after a university graduate won a court ruling that making her work for no pay at a Poundland store was unlawful.’
Financial Times, February 13
A blow struck for human rights against forced labour!
Hardly. That sort of talk was dismissed by an earlier court ruling. Cait Reilly had argued that the European Convention on Human Rights forbids “forced or compulsory labour”. The back-to-work scheme does not say “work in Poundland or go to prison”, but “work in Poundland or have your benefits withdrawn”. The courts felt there was a difference. (The Department for Work and Pensions tried hard to lose the case by referring to some of these schemes as “mandatory work activity”.)
So why are we hearing that the government lost the case?
The new ruling comes from the appeal court, which agrees that nobody’s human rights have been violated, but argues that the regulations underpinning these schemes are too vague. The government has responded with new rules. Let’s see how it works out. An interesting question is whether such schemes are a good idea.
How would you propose to produce an answer?
I don’t need to. The DWP has an answer for the Community Action Programme, which is the obligatory six-month work placement that was the scheme experienced by Ms Reilly’s joint appellant, Jamie Wilson. The CAP was subjected to the fairest evaluation available, a randomised controlled trial. It concluded CAP participants were no more likely to find a job than the control group. Perhaps the CAP could be regarded as a success in other ways, but a failure to help people find jobs is hardly an endorsement.
What would you suggest instead?
This is where the data speak volumes. Take the Future Jobs Fund, for example. It had similar aims to the CAP – to give six months’ work experience – but it worked differently, by subsidising employers who gave young people a job that pays at least the minimum wage. The subsidy lasted for six months, and a lot of the jobs disappeared when the subsidy did. Yet a DWP evaluation showed impressive effects, with participants more likely to have a job 18 months after their subsidised work had ended. The cost-benefit analysis of the FJF was favourable, too. Perhaps it was more effective than the CAP because the FJF jobs were, well, real jobs, with pay for the employee and a cost to the employer.
And the Future Jobs Fund was, presumably, legal?
Who cares? It was scrapped before the evaluation had been completed – the prime minister told the BBC it was “one of the most ineffective job schemes there’s been”.
Awkward.
Yes. It is ironic that this is one of the few areas where the government is carrying out rigorous tests of what works, and yet few people seem interested in what those tests discover.
There’s a moral issue here: we can’t allow people to mooch around on benefits without looking for a job.
Agreed, and that seemed to be what was behind the mandatory work activity. But the DWP seemed confused. The MWA was used to remind disengaged benefit claimants that job-seeking is a serious business, and yet official policy was that it was never to be used as a threat.
So it was some kind of punishment that could neither be introduced after a warning, nor introduced with no warning?
No wonder the courts thought it was too vague. But on the “mooching” point, Jobcentres can always threaten to withdraw benefits. Workfare schemes can’t be justified as a threat, then, only as a way to help people find jobs. The evidence they do doesn’t look encouraging. Intriguingly, the government’s Behavioural Insight Team has been running a trial with a Jobcentre in Essex, where the advisers on the ground floor use the old approaches and the advisers on the first floor use a new approach, and jobseekers are randomly assigned to the two floors.
What are the new approaches?
First, to streamline form-filling so that advisers can use the first meeting to talk about jobseeking strategies. Second, to discuss specific jobseeking actions over the coming weeks. Third, some touchy-feely stuff about expressive writing. The trial suggests this combination of approaches is effective. In fact the whole thing looks so successful that it can only be a matter of time before the programme is cancelled.
Also published at ft.com.
7 Comments
TickyW says:
Although the Future Jobs Fund was more successful than current schemes in getting people into jobs,I understand most of the jobs that its participants landed were in the public sector.
So from a government intent on cutting the public sector and public spending, such a scheme as the FJF would be perceived as a failure. So from the coalition’s point of view, the FJF was a failure. In short, the FJF was doing things right but not doing the right thing.
16th of February, 2013Martin says:
A workfare programme that gets people into a job if they’ve never had one or have been out of work for years is a great idea.
But forcing people into workfare when they don’t fit these circumstances is a waste of time. Reilly (a graduate doing volunteer work in a related job area) and Jamieson (a qualified driver) were in essence taking away places from people who needed them more when they were both already doing something to regain employment.
When you have a government target that coerces people to take any job irrespective of their skills/abilities, the logical conclusion is that of a reduced tax take (especially if these re-employed people earning less than their optimal wages end up claiming tax credits).
17th of February, 2013TickyW says:
It is eminently possible that work-for-your-benefit participants, all of whom are counted as employed in ONS’s employment count, may be a significant factor in explaining the productivity puzzle. This group, along with the large recent increase in the self-employed count who it is suspected have been pushed into self-employment by DWP, may provide the explanation for the production puzzle
17th of February, 2013Matty says:
There’s another couple of things which you’ve overlooked.
The first is that, well, people aren’t stupid. It doesn’t matter how much government ministers spin things, the people who are actually being put on these “workfare” courses do not appreciate it from my experience and are as happy with being made to work 20+ hours per week for no pay as you’d expect.
You mention that the Future Jobs scheme was much more effective. The reason for this seems, to me, obvious: giving people work that pays got people used to the considerable monetary advantages of being in paid work (because despite what the Daily Express might pretend, unemployed people don’t live in easy comfort) and when the job goes so does that extra money so they are more incentivised to get themselves back into paid work. Needless to say, with the workfare scheme this isn’t the case: people go from getting £71 a week in benefits to getting £71 a week in benefits once the workfare period has ended.
17th of February, 2013Someone says:
The incentives of the job centre are important as well. In NSW Australia they are Job Service Providers who get money for training and working with the unemployed thus never get rid of them.
As a student returning to Australia and not getting work I had the opportunity to try out the wonderful system. They didn’t help me a bit; I was so depressed I was applying for any job at that point; “Oh, we have contacts at McDonald’s” or some other place but never used the contact to get the job.
I asked whether an internship at some organization would be okay as I needed some local job experience. Answers was; “Yes, you can do an internship while studying but you still have to look for work and come in to our programs.”
And then after living for 1 or 2 month on any benefit you are stuck in a loop. You don’t have money only for very basic essentials and can’t get anything done that will help you get a job. I learnt a very good lesson from this although; when you are in a tough situation like mine was it doesn’t really count what your previous work experience or education is. We are always talking about humans who are trapped in a bad situation; of course some people abuse the system but punishing the majority for a minorities’ action is silly.
19th of February, 2013Peireo says:
Perhaps if there was growth and more job creation, how ever that is achieved, there would be less [pejorative] ‘mooching’. I’m sure out of 2.5million people, most would wish to be working, rather than trying to eek out an existence on £53-£71 per week.
19th of February, 2013SimonB says:
You missed another point. Why should government money be being used to subsidise commercial enterprises such as Poundland? Isn’t it better for us all for people with expertise in areas of use to public museums to contribute to the museum while developing their own skill set?
19th of February, 2013