Unemployment and the Great British Fob Off!

News that 97 per cent of posts created since the economy came out of recession are of limited hours will come as no shock the welfare to work sector. The statistics mean only 6,000 of the 200,000 jobs to have come up in a year pay a full-time wage.

Of further concern to providers is the fact that evidence showed the top performing provider only achieved 8% sustained job outcomes. The average caseworker will be already aware of this, but it seems the Department of Work and Pensions have chosen to ignore current labour market trends.

There is an increasingly trend emerging amongst employers to offer part-time, or ‘zero-hour’ contracts because there is often no National Insurance to pay on behalf of the employees as usually their earnings are comparatively low.

In addition, firms often do not have to pay overtime or pension contributions, unless the part-timer has worked more hours than a full time colleague. Unscrupulous employers have historically used zero-hours contracts as a means by which employees are only paid for work actually done. For example, a restaurant might employ three staff and not know how busy a particular night was going to be. The employer would therefore have staff 'on call' and unpaid, until it became busy enough to bring them out to serve.

One of the reasons employers have opted for these contracts is because they are worried about low growth levels, increasing inflation and the reluctance of banks to finance projects. This point was emphasized by David Frost, the Director-General of the British Chamber of Commerce, who said:

“Clearly there's a lot of nervousness about the future and companies are hiring people on a short-term basis in case the economy doesn't grow as expected. When there's more confidence companies will convert part-time people into full-time employees.”

This kind of uncertainty will not disappear overnight and the National Institute of Economic and Social Research (NIESR) warned it will take at least two more years before the economy claws back output lost to the crisis of 2008. In the meantime, unemployment will soar this year to a 17-year high of 2.8m - 8.8% of the workforce.

Now, let me draw an analogy. Let us assume you had a car parked outside that you needed for work. Let us also assume that every time you needed the car, it only started and ran 3 times in every 100 – would you continue to run the car? Presumably not. Yet the government adhere to a belief that the Welfare to Work sector offers the unemployed some kind of future salvation.

Clearly this is not the case and evidence shows large numbers are being referred to independent providers (who are paid handsomely for their services), only to be fobbed off with low-grade part-time work. This is hardly a solution and one can only stand in total confusion at Iain Duncan Smith’s professed allegiance to the process. Is it that he sees our future as all being employed part-time? Perhaps he doesn’t care about the unemployed and only wants to massage the statistics? Possibly it is because he sees the vast profits the Welfare to Work sector makes and thinks he can fool us whilst making companies like Serco, A4e, Working Links and others pay low rates of corporation tax.

The system is ineffective, fails to address fundamental problems within our labour market and offers no solutions to the unemployed. Rather than encouraging large corporations to bid for the new Work Programme, the government should be reviewing the entire process of how we fail those who are workless.

Morally, it is what should be done – I won’t hold my breath!