Tuesday, 26 June 2012

Research Files: Unemployment – a burden to all

Without doubt unemployment is a burden to all as well as a frustration. With unemployment figures showing no real sign of dropping, the prospect of higher taxes being levied to pay subsistence costs to those not working is not a happy one - but morally we shouldn't let people starve or go homeless. It doesn't take a genius to work out that it is always in our interests to have as many people working as possible. The more people work, the more money circulates as businesses have more customers. 

Let’s be honest - who of us hasn’t at some point in their lives faced the prospect of unemployment? If at no other time in our lives, as school leavers we do. At that point we just don’t know if we will make the grade or not. This is all the more likely when there is a national or global economic crisis or recession. In the last two years alone I have had go through the process of seeing through redundancies of fabulous staff in my role as a manager and been made redundant myself. Additionally, I have heard news of former colleagues from years ago of all ranks being made redundant too.

No one, I hope, likes redundancies – they are not pleasant processes to have to go through whether you are a manager implementing that painful decision, or a member of staff being made redundant. It should be (and usually is) a business decision not a personal slight which is of some comfort, especially when outside influences and not mismanagement has led to it.

There are in the UK employment laws and guidelines to follow - affected staff must be allowed time to seek alternative work and go for interviews and you cannot then hire new staff to take their place to do the same job. Nor are you allowed to use volunteers to do work that would normally be covered by a paid position, but we all know it happens. The ethics behind that I believe to be right but the realities of the working world mean that it can be of enormous help to both parties for volunteering to cover the essentials.  In rosier times, the hope is that those volunteers, having gained work experience, will be offered a paid position as a result of their efforts - although not everyone wants to be paid.

There is no point talking about unemployment though without understanding some realities the unemployed are facing - many of whom maybe friends, relatives and former colleagues of yours by now.

The realities of being unemployed
For those of you who have never been through the benefit system here is a brief outline of what others may be going through or have been through in order to secure work.

Firstly the amount you receive is determined by National Insurance contributions for the two types of Jobseekers Allowance. There used to be a crossover for top-ups if you had a medical condition or disability via Incapacity Benefits. More commonly now you are either on one or the other.  Housing (Council Tax) can be covered subject to meeting criteria and you don’t have to pay it back. It’s part of what we pay our taxes for – to help people through hard times so that they CAN get back on their feet and make contributions again when they secure work.  So far, so good but...

If you are a homeowner, unless you took out insurance against unemployment only the interest of your mortgage will be paid (up to a certain level and subject to meeting criteria) and even then it is only for a maximum of two years. Generally speaking home buyers have made additional contributions because they took out a mortgage, but not apparently to receive the same level of support if they hit hard times or indeed for as long.

However... all benefit claimants also get assistance with free prescriptions for most medical conditions, (not all) and further assistance is sometimes available for medical and other emergencies, even funeral costs (subject to criteria).

What you don’t get is additional money for utilities, food or clothing except in dire emergency. Basic benefits per week I believe on average to be £65.00 - that is the maximum you can be paid (it does go up by a couple of pounds after you've been deemed to be long-term unemployed (i.e. without work for six months or more). There are variations to this amount dependent on marital status, dependents and circumstances - hence the benefit fraudsters we hear about who capitalise on that. 

You can sometimes get assistance from the utility companies if they run such schemes and have money in the kitty to assist in emergencies (again dependent on criteria). There are too emergency benefits (e.g. Crisis Loans and Social Fund). These are usually in the form of repayable loans and payment usually starts (as far as I can fathom) immediately and are deducted at source thereby reducing the fortnightly sum of £130 further.

You DO NOT get additional money for internet connection, phone bills, envelopes and paper and postage when applying for work although there are things that help with that. The cost of running a car is also not covered.

To their credit the Job Centre does pay for travel expenses for interviews even retrospectively now so long as it’s provable and so long as the interview is over 15 miles from your home. It will also help with travel expenses all the way up to you receiving your first payment from a new employer. I happen to think the business world should do their bit to help the economy by paying new staff after their first week’s work. Cash flow may prevent it in all cases but none of us want to be paying more tax to facilitate those travel expenses do we? Without the government's intervention though, a lot of people simply cannot afford to even get to an interview.

A brief recap of the ethos behind welfare support
Initially the benefits system started to help UK citizens through times of extreme crisis to prevent starvation and homelessness and that is all. Its origins started in 19th Century with Victorian philanthropists not in the 20th Century as many suppose (you could argue it was earlier than that).

In the  20th  Century the welfare system formed and has since undergone many changes and had many restructures to government departments to run it - in my lifetime, from the DHSS (Department of Health and Social Services) to the DWP (Department of Work and Pensions). This latest incarnation says it all... the deal is that if you need assistance you MUST be trying your best to seek employment no matter what your circumstances are, regardless even of disabilities. There has never been any significant increase in benefits to cover the costs of job seeking or to help facilitate it except via Employment Adviser Services.

Welfare to Work Services
Welfare to Work and Employment Advice Services are in main contracted by the DWP. Most help by providing clunky old PCs, intermittent internet connections, a couple of phones (in usually an open plan office), envelopes, paper and postage. They provide sterling advice services and guidance for the unemployed to help them to get the most of job searches, assist with CVs, cover letters, applications and interviews. All people need to do is ask at their local job centre to access it. Each advice service is paid £14,000 per benefit claimant.

Most if not all work on a target basis set by the DWP so have little time for morale and motivation boosting prior to job search activities (hence additional services supplied by many charities, social enterprises and some private companies). Some of these target based organisations have failed during this recession because they didn't meet those targets. It begs the question - is some help is better than none particularly when demand for such services is, if anything, increasing according to recent reports? Is it perhaps a tad unfair to hold these service providers responsible for the effects of a recession? Then again, the government needs to ensure every penny it spends is spent wisely and effectively. 

The poverty trap
On the thankfully few occasions I have been on benefits I can honestly say that the vast majority of job seekers are honest people who want to be employed and not professional fraudsters who have no intention of securing legitimate work ever. It is therefore grossly unfair to criminalise and stigmatise the unemployed as a whole as aside from being extremely unhelpful – how does that solve the problem?

The most difficult issue by far is whether or not people will be better off for working. Often part-time work results in benefits being deducted penny for penny after the first £5-£20 is earned (dependent on circumstances). In most cases this meagre amount would not cover the travel expenses to get to work. The government has introduced the Back to Work Calculation and Tax Credits to assist, but frankly it isn’t enough. Rumour has it that new initiatives will be brought in next year - what they will be I haven’t a clue but I'm not hopeful.

The domino effect
In the last couple of years this economic crisis has seen many high ranking managers, company directors and even CEOs be made redundant; there are cases where they have become job seekers voluntarily resigning to ensure their organisations survive the recession and to save lower paid staff their jobs. Some have gone on to secure new positions at a lower level and at substantially reduced salaries. The knock on effect of that is that lower ranking managers end up taking the jobs normally taken by supervisors etc until in the end it hits the unskilled labour level or those looking for their very first job opportunity.

Compounding that are the recruiters and HR departments who are asking for more and more qualifications, skills and experience to help them shortlist (aside from anything else). This domino effect isn't unique to a recession but it certain escalates during one.

Another good initiative from the government did come in the form of apprenticeships and some funds for training but the latest indications are that they are likely to be cut now. Other ideas to resolve unemployment include more job-share opportunities, more jobs at lower salaries and quite simply short-listing according to what skills are required instead of on qualifications or even experience. I personally like the job-share idea best and more people being employed on a contract basis. In these uncertain times, businesses would do well not to over commit by offering contracts for over a year - nothing to stop them being reviewed and renewed though. With more short-term contracts the prospect of everyone getting some financially viable employment increases in my opinion.

An appeal to the business community
My real reason for writing this article is to inform the business community to prompt it to think about what it can do to ease the burden of vast numbers of unemployed people, as it helps no one, (nor the economy), to have people unemployed.

Heaven knows how complex it is for the DWP to overhaul the current system, but it certainly needs it. What hasn’t helped is successive governments scrapping what their predecessors have put in place that was working. Would that they displayed a more businesslike approach and collaborated to find the right solutions to sort this once and for all. A joint effort from all political parties on this issue might just achieve that, I think. Unlikely to happen though, I fear.

If you are experiencing any difficulty at all related to unemployment the Job Centres have information of local support agencies which are there to help you. Failing that there are the CABs (Citizen’s Advice Bureaus) - they are a charity and therefore reliant on donations etc for funding. Those working could help with either donations or by volunteering as advisers (if you have time to spare) as the CAB strives to provide information on the professional services out there for anything people may need a hand with.

The CAB does not help with looking for work. Instead google 'Welfare to Work', 'Employment Advice' and 'Careers Advice' services if ever you are stuck or indeed if you want to change your job. Any one of them should be able to list all local recruitment agencies as well as general and industry specific on-line sites where you can upload your CV and get job-alerts by email. If they don't... find another that does. That search also lists specific sources of help if you suffer from any form of disability although the Job Centres themselves will happily connect you to the local services they know of.

Hope it helps.


  1. What a fabulous blog post. My own thoughts are to have more people working less hours. Clearly you can't enforce this for self employed workers but for employers who employ staff then I would suggest the government bring in a ruling that no person can work more that a set number of hours per week. This would force business owners to bring in more staff - I'd like to see more people earning. It may be that those who are earning, earn less but better for more people to be earning less than to have lots of people not earning at all. The knock on effect to this is low moral, lack of motivation etc etc a spiralling downward effect. If more people worked but less hours at least people's self respect and dignity would be reclaimed & maybe, just maybe we might start to dig ourselves out of this mire!

  2. Thanks for your comment Social Progress. The theory of capped hours of work is fine, but I don't think it will ever happen for the simple reason that the majority of people don't like such things to be legislated for them.

    The work-time directive is about as far as I think legislating on hours will go and, as we know, there are employers still out there that don't adhere to that even under Employment Law.

    Aside from that, there is in my opinion too great a disparity over wages. Much as I love and am passionate about the Arts I can never fathom why some professionals in it warrant million pound salaries while some working in healthcare with all manner of responsibilities to get right are on a minimum wage. Art can increase wellbeing, but as yet I've not heard of it curing diseases or healing broken bones.

    It is perhaps not so surprising that the health sector does suffer from instances like Winterbourne occur when you consider how heavily reliant healthcare services are on hands on staff on low wages. If we continue to devalue health and emergency services like this in the long run we will end up paying more because more will need fixing.

    Healthcare professionals who slip up can end up costing someone else their life, few other professions have that weight of responsibility on their shoulders every minute they work with every 'customer' they encounter except possibly the emergency services.

    I can think of no other viable way to remedy the costs of running community services other than via the profits from businesses. Far better it was done that way that people were taxed more heavily. I think the tax levels are about where they should be, although more tax breaks for low salaries I feel would help not only those with such jobs, but the economy as a whole via empowering people who need it most.



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