Universal Credit and In-Work Conditionality – the employers view
by Katy Jones, Centre for Decent Work and Productivity, Manchester Metropolitan University Business School
Universal Credit – the new working age benefit for people who are unemployed or on a low income – potentially involves the introduction of “in-work conditionality” (IWC), placing responsibilities on individual claimants to increase their earnings (e.g. through increasing their hours/earnings in their current place of work or by taking up additional or alternative jobs elsewhere). These expectations may be backed up by support (e.g. through advice from Jobcentre staff), but also by benefit sanctions if individuals do not comply with mandatory work-related requirements.
Whist additional support for low-income workers is welcome, the extension of IWC (and sanctions) to those in work is controversial. Research focusing on claimant experiences has raised questions about the extent to which IWC results in meaningful in-work progression, and has uncovered the counterproductive consequences of a sanctions-based approach focused on requirements to apply for a high volume of jobs. Furthermore, employers are key to outcomes arising from such policies, but they have been largely absent from policy discussions. Our project (briefing note and full report), supported by PIN, begins to fill this gap, through consulting with 12 businesses operating in Greater Manchester.
The employers sampled offered a range of roles and contract types – some offered mainly full-time positions, others offered mainly part-time roles but required staff to take on additional work as required, some employed staff on zero hours contracts. Regarding expectations for employees to progress within their firm, employers said that this was something they would consider, however that the capacity for this varied, and weak consumer demand could make offering more hours difficult. Ultimately, their ‘bottom line’ would have more sway over expectations placed on staff, and there was widespread reluctance to increase wages due to perception that this would impact negatively on profits. Furthermore, employing staff on a part-time, flexible basis was central to existing business models:
“We wouldn’t want to have every single person on a full-time contract. We’d still need some flexibility to
fluctuate with the demands of business levels” (Employer 11, hotel)
Employers felt that the impact of IWC would depend on a range of factors including business needs, worker responses, and the approach taken (i.e. whether a supportive/sanctions-based approach, and the nature of support). There was a concern that IWC may be a hindrance to workforce flexibility and that it might adversely impact on staff motivation and well-being:
“[It’s] simple, happy team, happy guests…If we have a team who’s burdened with all these headaches,
then of course that’s going to impact on our quality, productivity” (Employer 5, hotel)
Employers also felt IWC could increase recruitment costs for businesses – not only due to increased turnover, but also if more applications were made by others subject to it. Interviewees complained about the high costs associated with dealing with a high volume of applications, which they felt in part resulted from the existing emphasis of Jobcentres on requiring jobseekers to focus on the quantity, rather the quality of applications and job fit.
In addition, some employers felt that policymakers should focus more on employer practices, rather than solely on claimants. Supporting employers to be better businesses was felt to be more likely to have a positive impact on both individual progression opportunities and firm performance:
“It would be probably more beneficial for the government to help employers become better employers, and to make the workplace a more positive environment than it is to push employees to get more jobs” (Employer 10, soft play centre)
Our project has highlighted a number of important issues which policymakers should consider as their ‘in-work offer’ is developed. Importantly, a ‘work first, then work more’ approach, focused on placing conditions on individual workers fails to consider long-standing issues of poor work quality and management practices, and appears to be at odds with the nature of the UK labour market, and broader policy agendas focused on improving productivity and work quality.
More information about the Centre for Decent Work and Productivity