Welfare to work and the 'lobster' effect

Most readers are aware that if you place a lobster in boiling water it will jump out. Yet, if you place it in cold water and increase the heat slowly it will stay in the pot until it eventually dies. If ever there was a living example of how that applies to humanity it is in the current behaviour of welfare to work staff.

Several weeks ago the government announced the closure of Pathways to Work and NDDP contracts and this was soon followed by the awarding of new contracts for the Tory flagship Work Programme. Analysts have long argued that Pathways to work and NDDP were destined for the ‘chop’ so it came as no surprise – yet a sizable number of people working in the industry seemed astonished the axe had fallen.

In a similar vein, the new prime and subcontractors are starting to recruit their staff for the delivery of the new contract. This has already meant that considerable numbers of people have been given redundancy notices and others have been advised they will be subject to TUPE regulations.

I have long argued that the new programme will not require anything like the numbers needed for the previous Flexible New Deal contract. Sadly, my insights are now starting to come to fruition. A number of large organisations have already started the process of ridding themselves of surplus staff, whilst a number have already started the process of TUPE’ing staff over to the new provider.

Inevitably this will mean that sooner or later new providers will ‘fill their books’ and have all the staff they need, leaving many staff who currently work for providers who lost out on the provision out on a limb.

Information coming in already suggests that at least three providers are without any work whatsoever after September, 2011 and this will mean they will have no need for any operational staff after that time. Unfortunately none of these companies have contacted the new providers to begin TUPE negotiations so this will inevitably leave everyone out in the cold and could result in at least 1,000 redundancies.

Overall it is unclear how many people will lose their jobs throughout the sector. Information from companies is deliberately vague and their employees are being fed little to no information. In most instances staff are being advised not to worry because they will be ‘subject to TUPE@ - but existing evidence has already shown this does not automatically mean they will still remain unemployed. Indeed, the available evidence is very much that because the financial model required by DWP was so close to the edge, most providers were forced to produce delivery designs where less staff would be required to achieve more, for less money.

Had the industry stated at the beginning of February that within six months 2 – 3,000 people (and possibly more) would be booted from their jobs there would have been an outcry. Staff would have been writing to the papers and to their MP; Grayling would have faced a picket line when he spoke at the Welfare to Work conference; some organisations might have had to contend with industrial action to protect jobs; MPs would have been asking questions in the House of Commons.

Instead the bosses remained silent – and if they did say anything, they told and continue to tell half-truths., or downright lies. Typical of this is A4e, who recently put staff in areas where they did not win on redundancy notice. The hope is that following TUPE consultation all of these people will move over to new employers – but of course this depends if they have vacancies. Also, some are starting to realise that local delivery managers may not be subject to TUPE and could find themselves out on their ear.

Sadly the people in the sector are almost certainly not going to do anything about it. Like ducks in the pond they are all waiting for the hunter to come and shoot them. Whilst they wait for the slaughter to begin most of these good people are working like Trojans in the hope that above average performance will somehow give them the chance of a new job.

It is very, very sad and people’s lives will be decimated because Duncan Smith and Grayling wanted to make their mark on the industry. Well they have – and as the cull begins, the blood is dripping from their hands.

Welfare to work - doesn't work.

Tomorrow, DWP will announce the latest unemployment figures and if reports in the Times yesterday prove accurate, we can anticipate the number of people claiming Jobseeker’s Allowance will fall by 4,200. What is equally likely is the number of people deemed ‘inactive’ (last month 9,328,000 were put into this category) will remain static or could even rise and there will be no significant decline in the number of people in part-time work.

According to research papers in the House of Commons library, since the recession began there has been a 5.4% increase to 7.9 million in the number of people working part-time. There has been a 3.5% decline in the number working full-time, to 21.2 million. The proportion of part-time workers who state that they are only working part-time because they cannot find a full-time job has increased from 9% before the recession to 15% now. This suggests that people are settling for part-time jobs when they would prefer full-time jobs.

Citizen Dave has told us we do not need to worry as the private sector are about to pick up the tab and employ many of these people. However, on this question the jury is still out. Private sector employment is up annually – by a positive-looking 428,000 – leading to an increase in overall employment of 296,000 on the year. But the sorts of jobs that have been created do not suggest a strong labour market recovery:

• 114,000 (39 per cent) are self-employed jobs;
• 12,000 (4 per cent) are unpaid family workers;
• 11,000 (4 per cent) are positions on Government supporting employment programmes;
• 206,000 are part-time (70 per cent); and
• Only 65,000 are full-time employee positions (22 per cent).

Significantly, no-one seems to be asking serious questions about why is this happening? One of the causes is down to the welfare to work industry. Each day thousands of people are required to see staff working for one of the many training providers delivering Flexible New Deal contracts. These contracts require any unemployed person unemployed for over 12-months to attend regular ‘motivational’ meetings with a caseworker with the aim of supporting them back into work.

Seems reasonable so far – except many of these ‘clients’ attending these programmes are encouraged to accept part-time employment often taking a drop in income that is below what they were receiving when they were on benefits. Sounds crazy? Not really when you consider that all of these providers receive a handsome payment for everyone they get into work and off the claimant register.

The fact they are financially worse off as a result of accepting the job is of no concern to staff working for these providers. Their job has been done. But does it make sense to force people into jobs that pay less than the pittance they receive on JSA. Anyone who accuses an unemployed person of being a “scrounger” clearly hasn’t lived on the dole.
Just look at the figures – they hardly offer the jobless a life of luxury:

Contribution-based Jobseeker's Allowance
The maximum weekly rates are:
Aged 16 – 24 £53.45
Aged 25 or over £67.50

Income-based Jobseeker's Allowance
The maximum weekly rates are:
Single people, aged under 25 £53.45
Single people, aged 25 or over £67.50
Couples and civil partnerships (both aged 18 or over) £105.95
Lone parent (aged under 18) £53.45
Lone parent (aged 18 or over) £67.50

It doesn’t make sense to force people into such low paid work and it disturbs me that the attitude of some of these frontline workers leans towards this idea. Now, let me be clear – I am not suggesting it is OK to sit back and claim benefit indefinitely without looking for work. It is right there is an expectation that people should seek employment. However, in a culture where the jobs aren’t available it is difficult to accuse the thousands of claimants seeking work of being ‘scroungers’.

Moreover, many of the ‘back to work’ calculations done by these frontline workers often conclude the client would be ‘better off’ taking a part-time job – but these calculations often fail to take into account certain factors such as the hidden expenses of going to work. For example, this morning I will go to work and call into a shop and buy a coffee before arriving at my office. Had I been home I would have put on the kettle. At lunch I will wander through the town looking for a pair of shoes for work. Had I been home I would have worn trainers or slippers – I would not have needed a replacement pair of shoes. The other costs go on.

We need to radically review the way we treat people claiming unemployment benefits. It is not enough to cram them into the first available job just so it gets them off the claimant register. We must work towards helping these people secure permanent full-time sustainable employment.

Now, Iain Duncan Smith would tell us the Work Programme is targeted to achieve just this and with £5bn worth of contracts currently being divvied up between 18 contractors, there is clearly a lot of profit in agreeing with the minister. But with at least 5 people still applying for every job we are a long way off achieving the goal of full employment.

The hard reality is that Work Programme, like Flexible New Deal before it will not work because it is being run ‘for profit’ and whilst this demon is present, providers will always seek quick easy solutions to secure payment.

It is time to accept the inevitable – welfare to work … doesn’t work.