Falling through the gaps: insecure work and the social safety net

Jane Mansour - Independent policy consultant, specialising in work, active labour market policy and adult skills

The composition of those in poverty in the UK is changing, and increasingly people in poverty are to be found in working households.  Both real wages and living standards are predicted to fall over the next few years in a way that is highly regressive, as prices rise and employers are unable or unwilling to offer higher pay.  Getting people into work has been the biggest anti-poverty policy of recent decades – millions have been invested by successive governments in active labour market programmes to deliver job outcomes for those on benefits, millions more on evaluating their impact.  However, such evaluations have not focused on measuring the programmes’ impact on poverty reduction.

The policy focus on work has been underpinned by evidence that demonstrates the value of employment for both physical and mental wellbeing.  Indeed, the Work Programme is now being replaced by the smaller Work and Health Programme.  However, the quality of work is central to broader positive outcomes.  Research from Australia has shown the importance: ‘Getting a high quality job after being unemployed improved mental health by an average of 3 points, but getting a poor quality job was more detrimental to mental health than remaining unemployed, showing up as a loss of 5.6 points.’  Poor quality work, whether defined by pay, security, or unpredictability is increasingly what is on offer to those most disadvantaged in the labour market.  In the UK there is no metric in place to help the government understand the extent to which the very work on offer undermines the outcomes it assumes work will produce.

Examples from the US show how changes in measurement requirements, at both national and state level can impact on labour market programme design.  The 2014 Workforce Innovation and Opportunity Act required job outcomes to be above a certain pay threshold in order to be counted.  The current model in the UK would need rethinking if Jobcentre Plus and other employment providers had to meet a similar quality proxy for the jobs they place people in.  New York City has a career pathways model, developed with a broad group of stakeholders, including unions, providers and employers.  It provides a framework that meshes employment and skills systems, measuring job outcomes based on pay.   The UK’s new metro-mayors, elected last week, with their wider geographical remit, offer an opportunity for a similar redesign, but it will require bolder demands for control of funding, and measurement mechanisms from the mayors themselves.

Lack of pay progression is a significant issue for adults in low-paid work.  The high marginal tax rates experienced as in-work benefits are withdrawn mean that a promotion may mean more stress, less flexibility with very little immediate financial compensation.  Employment support tends to focus on ‘entry’ jobs from benefits, so few jobseekers benefit from advice or calculations that look at potential future financial benefits of using jobs as stepping-stones to better pay.  Indeed, the evidence shows the most effective way to increase earnings is to move jobs.  However, this brings risks for the individual and so requires them to have confidence in the social security safety net in case moving doesn’t work out.  This confidence is eroded by increasing conditionality, logistical administrative lags, asymmetric information and the lack of honest discussion abut the impact of low pay and insecurity at the bottom end of the labour market.

This lack of information is compounded by changes to access to training.  Employers are more likely to invest in training their higher paid, (and already high-qualified staff) than those in entry-level roles.  Indeed, in many large public and private organisations security, administration, maintenance and reception roles may well be outsourced so those staff may well work under very different terms and conditions to those directly employed by the organisation.  People in low wage jobs, wanting to improve their skills in order to support progression are now expected to take out Advanced Learner Loans to fund their own training.  This ‘risk swap’ combined with significant cuts to the Further Education budget and poor information from learning institutions on the financial and labour market returns to the courses they offer, has seen a fall in the number of adults accessing education and training.

In the US in Washington State, the Workforce Board tracks results (numbers into work and earnings) and taxpayer return on investment for 12 programmes which, between them, account for over 98% of the federal and state dollars spent on workforce development.  This level of data is not available in the UK, so it is much more difficult to understand what works and how.

The Work and Pensions Committee have been examining self-employment and the gig economy.  They have noted the gap between Jobcentre Plus provision, Universal Credit and self-employed claimants.  One of their recommendations was the need for more specialist advisors and support for those working in this way.  However, provision of support for all claimants (both in and out of work) needs to be reviewed in the context of labour market changes.  This review needs to take account of how jobs are measured, access and information about adult learning, as well how technology enables support to be delivered differently.  In France, Macron’s employment programme addresses the social cost of precarious jobs by proposing employers using casual workforces bear a financial cost.  The incentives in the UK run in the opposite direction.

There is scope, in better delivery of work support, to challenge the atomisation and isolation of workers and the loss of social capital and networks of new working models.  The precarity of insecure work needs to be addressed, rather than exacerbated, by the systems set up to support people through their working lives. In roles where working hours are flexible or unpredictable, the division between private and public lives can be complex.  The interaction between the individual and the state needs to understand that complexity and support people to navigate through their working lives rather than leaving them without a compass or adequate map.

This article is part of SPERI and openDemocracy’s joint series on labour and work in the modern economy