Rich man, Poor man - the two face of Welfare to Work

Yesterday I talked about the 460 redundancies at A4e and today, I would like to continue along the same theme. You see, if all we were talking about were those jobs, it would be sad, but not a disaster. Regrettably, the position is far, far worse.

In a recent survey of training providers, ERSA (the trade association for all providers working in the welfare to work sector) identified that amongst a third surveyed there were 1,500 anticipated job losses as a result of the closure of Pathways to Work and New Deal programmes. Now, this was only the amount identified from those who responded to the survey. If you add to this the number from those who failed to respond, then conservatively you could easily be looking at over 2,000 redundancies within the sector.

But even this is not the end. In a few weeks, DWP will announce who has been successful in bidding for delivery of the Work Programme. Over the days that follow, those selected primes will advise subcontractors of the extent of delivery they will be offered and in which regions. Logically, not everyone will be successful and though more optimistic forecasts predict most frontline staff will be absorbed into the new delivery companies, this seems far from reality.

The hard facts are that due to the funding arrangements, companies will be forced to keep costs to a minimum. Add to this the fact that transition to a new programme is always slow and you compound the problem. Take Flexible New Deal as a previous example – many anticipated a large flow of referrals from Jobcentre Plus right from the start, but the reality was that it took over six months for numbers to even approach expected targets. For some weeks many staff were ‘hanging around’ waiting for the work to come in.

This time round, companies will be less inclined to make the same mistakes.

Many frontline staff will thankfully be subject to TUPE arrangements and, as a result, will find themselves transferred over to new deliverers. But what about those currently employed as administrators, HR staff, training teams, health and safety personnel, cleaning and maintenance departments, business development teams and, in some instances, employer engagement teams? All these people will find themselves vulnerable, especially if the new prime is already established in that area and has an existing solid infrastructure within the region.

If only 35 companies found themselves without any work as a result of the new contract, and these organisations were forced to ‘let go’ of 15 staff, this would add another 500 people to the overall seepage in the sector – and making a total of over 2,500 job losses in just over 3 months.

There is a clear divide in the Welfare to Work sector. You seldom if ever see any senior management volunteering to be the first to accept redundancy when the axe falls, it is always the grunt, the oik who has to graft whilst ‘management’ squeeze out more money for their advantage. It is seldom the managing director who says to his workforce “It’s not fair and as a gesture I will be the first to leave this company – see you on the dole queue!”

Today, Will Hutton reported on Fairer Pay and in line with some of his “recommendations” I am publishing some of the pay differentials between directors and frontline workers. Take a look at the following. In 2009, Reed in Partnership paid out £844,00 in director’s remuneration, with the highest paid director earning £238,000 – an increase of 40.83% over the last four years. Or EAGA, whose directors earned a massive £1,538, 000 (an increase of over 68%) over the last 7 years – and the salary of their highest paid director? Would you believe a meagre £457,000 – an increase of (wait for it) over 96% over the last 7 years. Or, how about Working Links, where their directors have earned a mighty £354,000 (an increase of 139% over 6 years) and their highest paid director earned £222,000.

Compare this with PeopleServe, where the last recorded average salary for employees (2009 figures) was £16,338.65. Now accepted PeopleServe are low payers, so let’s look at Working Links again – their average wage is about £25,941, a big differential between the two companies. In the latter case, staff at Working Links might like to reflect on the size of any pay rise they had over the last two years, because the highest paid director in that company allowed himself an enormous 20% increase.

G4S is a widely known public limited company with interests in a variety of sectors, including welfare to work. Last year, its 23 directors enjoyed the rewards of the company’s success by enjoying £4,460,000 between them.. Their highest paid director earned a staggering £1,656,000 … and the average salary within the company? Would you believe - £6,846.62!!!

How about Pertemps? Their directors shared out £415,000 between the 15 of them and their highest paid director earned £289,000. Meanwhile the average pay of a member of staff was £26,631,64.

If you aren’t angry by now, let’s go back to those 460 staff at A4e who are now on redundancy notice. The 15 directors of that company shared £2,128,000 between them last year, an increase overt the last 7 years of over 189.52%. Their highest paid director earned £640,000, but we should feel sorry for them, because during the same period, their salary only went up 99.38%. Unsurprisingly, the average salry of a member of staff within the company is not in the public domain, but you can bet their income hasn’t gone up as much during the same period!!!

I could bore you with many more figures. Suffice to say, there is a division between the experience of frontline staff, who are paid poorly for a highly stressful job and face the risk of redundancy every five years and the directors who manage them, most of whom have been sneakily sucking off all the cream from the milk for years.

It is time the sector started to clean up its act. It is run by ‘fat cats’ who, despite their feeble protestations, only want to feather their own nests and do not care about the thousands who, in a few weeks time, will face redundancy. Remember that patronising letter to A4e staff yesterday? It does the sector no good when directors, earning such huge salaries rely on the devotion staff have to their jobs whilst they fleece they system to fill their greedy pockets.

It is a disgrace and it is time employees in the sector started to vocalize their anger.