Universal basic income: too good to be true?

“I am now convinced that the simplest approach will prove to be the most effective – the solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income.” Martin Luther King, 1967

It may come as a surprise to learn that the current ‘hot topic’ of universal basic income (UBI) – also known as basic income or income guarantee – is actually over 500 years old.

It was first developed by radicals such as philosopher Sir Thomas More in the 16th century, drawing upon humanist philosophy.  It was mooted by Thomas Paine in the 18th century, and then again in the mid-20th century, by economists such as James Tobin and Milton Friedman.  In 1967, Martin Luther King called for a ‘guaranteed income’ to abolish poverty, and in the 1970s, a basic income experiment ‘Mincome’ was conducted in Canada.

However, only in recent years has debate on universal basic income (UBI) moved into the mainstream.

From the threat of job losses from automation and artificial intelligence, an overly complex and bureaucratic welfare system that has been branded ‘unfit for purpose’, to the failure of conventional means to successfully tackle unemployment over the last decade – basic income has been hailed as a key way to reduce inequality and provide a basic level of financial security upon which individuals can build their lives.

It has many current supporters – including billionaires Elon Musk, Mark Zuckerberg, and Richard Branson.  There is support among the general public too, with a recent poll reporting that nearly half of all adults aged 18-75 in the UK (49%) would support the UK Government introducing UBI at the level to cover basic needs in principle.

 

How does it work? 

In essence, UBI offers every citizen a regular payment without means testing or requirement for work.

Trials of different models of basic income have been conducted around the globe, including Kenya, Finland, and Canada.  There are also UBI trials planned in the district of Besós in Barcelona, Utrecht in the Netherlands and the Finnish city of Helsinki.  Closer to home, four areas in Scotland are also currently designing basic income pilots – Glasgow, Edinburgh, Fife and North Ayrshire.

While there have been many different models of basic income trialled and assessed over the years, in general, basic income schemes share five key characteristics:

  • Periodic: it is paid at regular intervals, not as a one-off grant.
  • Cash payment: it is paid in an appropriate medium of exchange, allowing those who receive it to decide what they spend it on. It is not paid in kind (such as food or services) or in vouchers with a specific use
  • Individual: it is paid on an individual basis—and not, for instance, to households.
  • Universal: it is paid to all, without means test
  • Unconditional: it is paid without a requirement to work or to demonstrate willingness-to-work

 

Anticipated benefits

The key anticipated benefits of the introduction of UBI is a reduction in inequality and poverty. However, advocates claim that it would also have many other benefits.  These include:

  • simplifying the existing welfare system (including efficiency gains)
  • reducing the psychological burden and stigma associated with welfare benefits
  • achieving more comprehensive coverage – no one ‘slipping through the net’
  • fixing the threshold and ‘poverty trap’ effects induced by means-tested schemes
  • enabling individuals to continue education and training, or retrain, without financial constraint dictating choices
  • making childcare arrangements easier
  • rewarding unpaid contributions such as caring and volunteer work
  • improving gender equality and help women in abusive situations
  • improving working conditions
  • addressing predicted future mass unemployment as a result of automation

 

Criticism

The key argument against the introduction of UBI is its cost – essentially that “an affordable UBI would be inadequate, and an adequate UBI would be unaffordable”.

Critics argue that if UBI were set at a level that enabled a modest, but decent standard of living on its own, then it would be unaffordable – either requiring much higher taxes, and/or the redistribution of funds from other areas, such as education or health.

However, if UBI was set too low, it would not provide an adequate income to live on, and it may be exploited as a subsidy for low wages by unscrupulous employers.

Others, such as economist John Kay, have argued that UBI simply would not have the redistributive effects intended.  Rather than improving the lives of those most in need, who would receive more or less the same as they do under existing welfare systems, it would instead provide more for the middle classes.

There is also some concern that UBI may undermine the incentive to work, and lead to the large-scale withdrawal of women from the labour market.

 

What does the evidence say?

Certainly, there is a beauty in the simplicity of UBI – and no one can argue against the goals of reducing inequality and poverty.  However, in truth, there just isn’t enough evidence available yet to judge whether or not the full-scale introduction of UBI would be successful.

While many pilots have demonstrated positive results, most have been of limited size and scope, and it is difficult to extrapolate these findings to the wider population.

Analyses by a wide range of organisations – including the RSA, the Joseph Rowntree Foundation, the OECD, and the International Monetary Fund, have drawn mixed results.

For example, a review conducted by Bath University in 2017 concluded that:

The unavoidable reality is that such schemes either have unacceptable distributional consequences or they simply cost too much. The alternative – to retain the existing structure of means-tested benefits – ensures a more favourable compromise between the goals of meeting need and controlling cost, but does so at the cost of administrative complexity and adverse work incentive effects.”

Similarly, the IMF conclude that in the UK and France, UBI would be inferior to existing systems in targeting poverty and inequality. However, there are some aspects of UBI that are difficult to model, such as the behavioural impacts of having economic security.  Trials and experimentation are important sources of such information.

Thus, the planned trials of UBI in Scotland and elsewhere may well help to provide further answers.  And we – along with others around the world – will be watching with interest.

As First Minister, Nicola Sturgeon aptly puts it:

It might turn out not to be the answer, it might turn out not to be feasible. But as work and employment changes as rapidly as it is doing, I think it’s really important that we are prepared to be open-minded about the different ways that we can support individuals to participate fully in the new economy.”


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Opportunity or necessity… what’s fuelling the growth in self-employment?

iStock_650068Small_BusinessManInMeadow

With unemployment reaching its lowest level since 1975, it may seem like the state of the labour market has improved in recent years. However, a closer look at the statistics suggests that this is not necessarily the case.

The strong performance in the labour market in part reflects the growth in self-employment, which has been a distinguishing feature of the labour market’s recovery since the last recession.

Growth in self-employment

There were almost 750,000 more self-employed in the UK workforce at the end of 2014 than at the start of the global financial crisis in 2008, representing a high proportion of the total net growth in jobs over this period. Self-employment accounts for over 15% of those in work in the UK – 4.8 million of a workforce of around 32 million. Between March 2008 and March 2017, self-employment accounted for almost a third of total employment growth.

The significance of the contribution of self-employment is highlighted in a recent article published in Regional Studies, which notes that of the 920,000 net new jobs created between quarter 1 of 2008 and quarter 2 of 2014, 693,000 were in self-employment.

There has also been a rise in the share of female self-employed and those that work part-time, in addition to growth in a broader range of industries and occupations among the self-employed.

Recent ONS figures also show that the growth in self-employment between 2001 and 2016 has been driven mainly by those who have a degree (or equivalent), leading to the share of the self-employed with a degree or equivalent increasing from 19.3% in 2001 to 32.6% in 2016 as a share of total self-employed. As a share of total employment (self-employed and employed), the figures show that relatively highly-qualified individuals are becoming more concentrated in the self-employed.

Earnings growth?

The reasons for this growth has been the subject of much debate, particularly as research suggests many fail to earn a decent living. This recent analysis by the New Economics Foundation found that 54% of all self-employed people are not earning a decent living. It also found that the percentage of the labour force in ‘good jobs’ had decreased from 63% in 2011 to 61% in 2016, suggesting that the quality of jobs is perhaps declining.

Similarly, the ONS figures suggest that the self-employment labour market remains financially insecure for its workers. They show that the distribution of self-employed income appears centred around £240 a week, much lower than that for employees, which is centred around £400 a week.

And, according to a recent report from CIPD, their real incomes have fallen more since 2008 than those of employees.

Perhaps, then, the self-employment growth has been driven by necessity rather than choice due to a lack of opportunity in the full-time labour market.

However, the evidence suggests it is not this simple.

Despite the widening gap in earnings between the self-employed and employed, the self-employed continue to have higher levels of job satisfaction than employees. The ONS figures also indicate that self-employed workers were more likely to supplement their income from elsewhere.

This would suggest that choice probably plays a large part in self-employment.

‘Push’ or ‘pull’ effect

There has been much discussion over whether the growth in self-employment is predominantly a result of choice or necessity.

It is often seen as a sign of labour market weakness, with self-employment perceived as a ‘last resort’ where a regular job can’t be found. The evidence suggests that this motivation accounts for just a small proportion of the change, however, with most of the rise in self-employment appearing to be out of choice rather than necessity.

Indeed, the recent analysis in the Regional Studies article, which examined the extent to which self-employment was associated with local ‘push’ or ‘pull’ effects, found little or no suggestion of any net ‘recession-push’ effect on self-employment. It suggests that:

  • ‘pull’ factors are more significant in driving transitions into self-employment;
  • self-employed business ownership appears not to function as a significant alternative to unemployment where paid employment demand is weak; and
  • entrepreneurial activity prospers where local wages are higher and unemployment lower.

The uncertainty surrounding Brexit could also be having an effect as declining employer confidence has contributed to a growing number of short-term contracts – potentially making self-employment appear the better choice.

Final thoughts

As the CIPD report highlights, there are probably more opportunities for self-employment now than there were a decade ago. And the self-employed are more likely to value highly aspects of the work, such as its variety, and choice over their working hours and pay.

Across the range of job-related characteristics, it is shown that the self-employed are as satisfied or more satisfied with their working life than employees, resulting in higher levels of overall job satisfaction – a finding that is consistent both over time and from different data sources.

In a time where work-life balance is of increasing importance, it is perhaps no surprise that self-employment is the path of choice.


If you enjoyed reading this, you may also be interested in our previous blogs on the gig economy, ‘the self-employment boom’ and ‘olderpreneurs‘.

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Is the record high employment rate masking the reality of in-work poverty?

wage-packetBy Heather Cameron

The employment rate may have hit a record high of 74.6%, with unemployment continuing to run at an 11-year low, but in-work poverty has also reached unprecedented levels.

More than half (55%) of people in poverty are living in working households, including millions of children, according to the latest Monitoring poverty and social exclusion (MPSE) report.

And new research for the Joseph Rowntree Foundation (JRF) published last week says four million more people are living below an adequate standard of living and ‘just managing’ at best.

Statistics

The findings of MPSE paint a bleak picture for a substantial share of the UK population. It notes that the proportion of the UK population living in poverty has barely changed since 2002/03, remaining at around 21%. And at 55%, those in poverty in working households has reached its highest level since the data set began in 1994/95.

Of this 55%, four fifths of the adults in these families are themselves working – a total of 3.8 million workers were living in poverty in 2014/15, an increase of around a million since 2004/05.

Female employees make up the single largest group within this group at 1.5 million, followed by male employees at 1.4 million. However, the majority of workers in in-work poverty are male (53%) as there were 620,000 male self-employed workers in poverty in 2014/15, while there were 250,000 female self-employed workers.

The story is different for workless households, however, as the proportion of people in poverty in these households has decreased, with the number in workless or retired families having fallen by half a million. Despite the significant increase in the number of people aged 65 and over, the figures show there are 400,000 fewer pensioners in poverty. There have also been reductions in the number of children in workless households.

While this is clearly encouraging, as the MPSE report suggests, it is difficult to categorise this as progress since there has been little change in the relative poverty measure overall.

Moreover, the new research from JRF warns that millions of just managing families are on the tipping point of falling into poverty as 30% of the population are living below the minimum income standard (MIS). In addition, 11 million people were found to be living far short of MIS, up from 9.1 million, who have incomes below 75% of the standard.

So what is causing these worrying statistics?

Contributory factors

The labour market has undoubtedly had some influence on these figures, with low wages and insecurity. Although average incomes have begun to rise, they are still below their peak. Male weekly earnings are still lower than 2005 levels and female weekly earnings, although now equal to 2005 levels, are still below what they were in 2010.  And with inflation expected to return, it has been suggested that hourly pay is unlikely to reach its pre-recession peak before 2020.

However, this is only part of the issue. There are also a number of other contributory factors, including:

  • increasing cost of living;
  • housing market failures; and
  • cuts in welfare benefits.

The increase in numbers living below an adequate standard of living has been driven by rising living costs while incomes stagnate. The price of a minimum ‘basket of goods’ has risen 27-30% since 2008, and average earnings by only half of this. The JRF analysis suggests the cost of living could be 10% higher by 2020, a period when much state support has been frozen.

Housing is also an important factor. It is often too expensive and of poor quality, particularly in the private rented sector. The MPSE findings show that the number of private renters in poverty has doubled over the last decade, with rent accounting for at least a third of income for more than 70% of private renters in poverty.

Households accepted as homeless and those in temporary accommodation have also increased and landlord evictions are close to a ten-year high.

Added to this, is the four-year freeze on benefits, tax credits and Universal Credit (UC), along with a reduction in the overall benefit cap. The benefit cap mainly affects households with children and will increase the number of families affected, from 20,000 to 112,000.

All this puts those on the lowest incomes at risk.

Way forward

Clearly, strong growth in the number of people in employment does not mean an end to employment-related disadvantage.

To help end poverty, the JRF has called on the government to make a number of changes, including:

  • reversing cuts to the amount people can earn before their benefits are reduced;
  • ending the freeze on working age benefits;
  • extending support to low wage sectors to reduce the productivity gap; and
  • investing in a living rents scheme to provide more affordable housing.

As the MPSE report concludes, “solutions for in-work poverty require more than just more work.”


If you enjoyed reading this, you may also like our previous articles on poverty.

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‘Think globally, act locally’ – local job creation

Jobssign2

By Heather Cameron

The Local Government Association (LGA) last week called for greater devolution of employment and skills funding to councils and a ‘radical rethink’ of the way Jobcentre Plus works. Chairman of the LGA’s People and Places Board said:

“Job centres need to engage with more unemployed people for a start and then help more claimants move into sustainable employment. This is crucial to boosting local growth. Councils know best how to do this. We know our local economies, we know our local employers and we know our residents and we can bring local services together in a way central government will never be able to.”

Local solutions

Of course, local solutions for job creation and economic growth is not a new idea. Local development and job creation initiatives first emerged in the 1980s, in response to a ‘new phenomenon of high, persistent and concentrated unemployment that national policies seemed powerless to reverse on their own. Since then they have continued to spread and develop.

Although unemployment is at an 11-year low in the UK, according to recent research many countries, including the UK, are seeing widening gaps in the geographic distribution of skills and jobs. And the importance of local solutions has again been highlighted.

The OECD’s most recent edition of Job Creation and Local Economic Development argues that local development is a key tool for addressing the problem of such unequal distribution. Similarly, in its submission to last year’s Autumn Statement, the LGA argued that local government is central to the delivery of locally tailored solutions to national public policy challenges.

Boosting productivity growth, while ensuring growth delivers improved living standards and distributes the benefits of increased prosperity equally, are highlighted by the OECD as the twin challenges facing all policymakers. Underlined as a crucial but difficult task, it is argued that ‘actions originating at any single governance level or policy area will not be sufficient’.

Whole-of-government approach

The OECD report, therefore, examines how national and local actors can better work together to support economic development and job creation at the local level. In particular, it outlines what both national and local actors can do to improve the local implementation of vocational education and training (VET) and SME and entrepreneurship policies.

Among the recommendations for national actors include:

  • Design VET frameworks that allow local stakeholders to tailor training to local labour market needs while still maintaining a certain level of national consistency
  • Build the capacities needed to make VET systems more agile locally
  • Develop a strong national apprenticeship framework that builds a high quality system, includes strategically-designed incentives for employer participation, and allows for flexible delivery frameworks
  • Maximise the efficiency of SME and entrepreneurship policy delivery by allowing for local tailoring, co-locating services, using intermediary organisations to deliver programmes, and/or developing formal agreements for the division of competences and financing between governance levels
  • Develop national frameworks and strategies to support disadvantaged young people in entrepreneurship, and clearly assign responsibility for this policy portfolio to a single agency or ministry
  • Embed entrepreneurship into national education frameworks, while also providing integrated packages of entrepreneurship support in other settings to reach young people outside of the education system

Among the recommendations for local actors include:

  • Balance the need to meet pressing local labour market demands with ensuring that VET helps to move local economies to higher skilled and value-added products and services
  • Encourage VET teachers and trainers to maintain contact with local employers and industries to keep their skills and knowledge up-to-date
  • Boost employer engagement in apprenticeships
  • Tailor the delivery of apprenticeship programmes so that they work better for a broader range of employers, including SMEs, and disadvantaged populations
  • Forge connections across administrative borders in developing and co-ordinating entrepreneurship and SME policies
  • Work with organisations that have already established relationships with disadvantaged youth to maximise the reach of entrepreneurship programmes
  • To better reach disadvantaged youth, provide integrated packages of support, use hands-on learning methods, and involve entrepreneurs in programme delivery

Decentralisation?

The report concludes that local actors need both flexibility to tailor delivery of national policies to local conditions and the capacity to use this flexibility to ensure informed decision-making.

It is noted that this doesn’t necessarily mean political decentralisation, but rather ensuring the right tools are used to add local flexibility while maintaining national coherence.


If you found this article interesting, you may also like to read our previous blog on Local Enterprise Partnerships

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Equal to the task? Addressing racial inequality in public services

huddleCLR

Throughout October, a series of events to promote diversity and equality will take place as part of Black History Month. Although there are many achievements to celebrate, it is an unfortunate fact that many people in the UK today still experience disadvantage due to the colour of their skin.

Over the summer, reports by the Equality and Human Rights Commission (EHRC) and the UN Committee on the Elimination of Racial Discrimination (CERD), found that racial inequality in the UK was ‘worryingly high’.

In its biggest ever review of race inequality in the UK, the EHRC concluded that:

“while for certain people life has become fairer over the past five years, for others progress has stalled and for some– in particular young Black people – life on many fronts has got worse.”

Audit of racial disparities announced

The government responded quickly by announcing an audit of racial disparities in public services. It promises to ‘shine a light on injustices as never before’.

From summer 2017, Whitehall departments will be required to identify and publish information annually on outcomes for people of different backgrounds in areas such as health, education, childcare, welfare, employment, skills and criminal justice.

As well as enabling the public to check how their race affects the way they are treated by public services, the data is also intended to help force services to improve.

The audit is being called ‘unprecedented’ – and it certainly is – up until now, public services in the UK have not systematically gathered data for the purposes of racial comparison. Indeed, according to the FT, very few countries, if any at all, currently produce racial impact audits.

‘Worryingly high’ levels of racial inequality

The audit will have its work cut out.  The review by the EHRC found that, compared to their White counterparts, people from ethnic minorities were more likely to be:

  • unemployed
  • on low wages and/or in insecure employment
  • excluded from school
  • less qualified
  • living in poverty
  • living in substandard and/or overcrowded accommodation
  • experiencing mental and physical health problems
  • in the criminal justice system
  • stopped and searched by police
  • a victim of hate crime
  • a victim of homicide

Institutional racism

Similarly, the CERD findings into how well the UK is meeting its obligations under the International Convention on the Elimination of All Forms of Racial Discrimination (ICERD) raised serious concerns about the level of institutional racism in UK public services. Omar Khan, of the Runnymede Trust, suggested that the findings would ‘embarrass the UK on the world stage’.

Longstanding inequalities in access to services, the quality of care received and patients’ health outcomes were criticised, as was the over-representation of persons belonging to ethnic minorities in psychiatric institutions.

The committee echoed the EHRC’s concerns regarding higher unemployment rates and the concentration of persons belonging to ethnic minorities in insecure and low-paid work.  They also criticised the use of discriminatory recruitment practices by employers.

In education, there were concerns regarding reports of racist bullying and harassment in schools, and the lack of balanced teaching about the history of the British Empire and colonialism, particularly with regard to slavery.

The committee also concluded that there had been an outbreak of xenophobia and discrimination against ethnic minorities, particularly since the EU referendum campaign.  Indeed, the rise in post-Brexit racial tensions has been widely acknowledged.

Equal to the task?

Although the audit has been welcomed by many, including the EHRC, others have raised concern about the extent to which it will tackle the root of the problem.  Danny Dorling, of Oxford University, remains sceptical, stating that “within two or three years every single one of these audits is forgotten”.

Some have noted that in order to be effective, the audit will also have to capture outcomes for migrant families, and for poorer White people, who also suffer from discrimination and disadvantage.  Others, including Labour’s Angela Rayner, shadow equalities minister, have noted that there is a ‘huge gap’ in the review as it would not include the private sector.

The EHRC have called upon the government to createa comprehensive, coordinated and long-term strategy to achieve race equality, with stretching new targets to improve opportunities and deliver clear and measurable outcomes.”

Certainly, the data produced by the racial equality audit may well provide some basis for the establishment of such targets.

So while this October there is cause for celebrating the progress made so far, the findings of the EHRC and the CERD underline just how entrenched and far-reaching race inequality remains.  As the EHRC states:

“We must tackle this with the utmost urgency if we are to heal the divisions in our society and prevent an escalation of tensions between our communities.”


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Basic Income – a simple solution to a complex problem?

By Heather Cameron

If you want to incentivise work at every level of income then Basic Income is simply the best system.” (RSA, 2015)

Last month MPs in the UK Parliament were asked to consider the question of introducing a universal basic income to be payable unconditionally to all citizens without means-testing or work requirement.

The motion, which was tabled by Green Party MP Caroline Lucas, says the policy “has the potential to offer genuine social security to all while boosting entrepreneurialism”.

While no vote was taken on the policy, and it is unlikely to be made law any time soon, the motion raised the profile of the issue by enabling MPs to add their name in support.

And with ever increasing global interest in the idea, and basic income pilots set to spring into action all over Europe this year, perhaps it’s not as far away from becoming a reality in the UK as we may think.

Pilots

A number of cities and countries across Europe have committed to trialling a basic income.

Last year Finland announced a national basic income experiment, scheduled to start in 2017, which will be the EU’s first nation-wide project. It will see up to 100,000 Finnish citizens paid an unconditional income for a period of two years, after which the results will be analysed to see whether it should be rolled out nationally.

Trials have also begun in the Netherlands. The Dutch city of Utrecht will pay a small group of benefits claimants, whether they work or not, a basic income of £660 a month to provide a basic standard of living and help them avoid the ‘poverty trap’.

In Switzerland, a national referendum on a basic income is planned for this year, and support for the idea has also been reported in France and Canada.

While it is too early to tell whether these pilots will have the desired positive effect, the concept of a basic income is far from new and there have been signs of success from past experiments.

Positive outcomes

In the 1970s, a basic income social experiment, ‘Mincome’, was carried out in the Canadian town of Dauphin, which involved making payments to the entire population, relative to income to cover basic living costs. The programme succeeded in reducing poverty, improving health and alleviating other urban problems.

More recent basic income projects in developing countries have also helped alleviate poverty. In Namibia, a coalition of aid organisations trialled a basic income, funded through tax revenues, of 100 Namibian dollars to each citizen. The result: crime was reduced, children attended school and many villagers used the money to fund micro-enterprises. Meanwhile, in Uganda, a similar programme increased business assets by 57%, work hours by 17% and earnings by 38%.

Critics of such a system say that it would cost the state too much money, and would lead to welfare dependency and a reluctance to work, ultimately resulting in higher unemployment.

A recent survey undertaken in Switzerland would seem to refute this. It indicates that only a very small proportion of the population would stop working if they had a basic income and a majority believe that it would “relieve people from existential fears.”

Similarly, the Canadian experiment found no substantial difference in either female or male unemployment. There were changes in the labour market, as would be expected, with a reduction in working hours within families as a whole. Female spouses reduced their working hours to spend more time with children; and hours were reduced for adolescents within the family who entered the workforce later, suggesting that they were able to stay in education longer.

Way forward for the UK?

The Royal Society for the encouragement of Arts, Manufactures and Commerce (RSA) has recently concluded that there is a strong practical case for basic income in the UK to replace the current tax and benefits system – “it underpins security, replaces the complexity of the current system, and provides a platform for freedom and creativity.”

The RSA report sets out a potential basic income model for the UK. It would provide a universal payment to every citizen, (with restrictions for migrants and those serving custodial sentences). A ‘basic’ amount paid to everyone of working age would provide incentives to work, therefore mitigating against low pay traps of the current system. It would also, the RSA report claims, mitigate against some of the negative distributive effects of basic income schemes by redistributing from higher earners to families with children.

The report calculates household income, comparing the proposed model with the current system of likely Universal Credit/National Living Wage income for 2020/21. In all instances, ranging from single parent families with children under or over five to couples with children under or over five, there was a gain for household income under the basic income model.

With the current welfare system and all its complexity, the new Universal Credit apparently not doing what it’s supposed to and the continued increase in job automation, is this really just a simple solution to a complex problem?

Perhaps by the end of 2016, there will be more evidence for the UK to seriously consider.


Follow us on Twitter to see what developments in public and social policy are interesting our research team.

Further reading: if you liked this blog post, you might also like:

Spreading the word on the living wage

By James Carson

Last week, Church of England bishops issued a letter calling for a new direction that they believe political life in the UK ought to take. Among the bishops’ recommendations was support for the living wage:

“It represents the basic principle that people are not commodities and that their lives cannot adapt infinitely in response to market pressures.”

It didn’t take long for the media to find flaws in the Church’s own approach to paying its staff. This week it was reported that a Church job in Canterbury was being advertised at £6.70 per hour. The living wage, calculated from the basic cost of UK life, is currently £7.85 an hour outside London.

Low pay seems likely to be one of the key issues in the general election campaign, so a new report from the Joseph Rowntree Foundation (JRF) is especially timely.

Low pay is endemic

The report describes low pay as “endemic” in the UK labour market, noting that more than one in five workers in the UK experience low pay, a proportion that has changed little in more than 25 years.

Among the research findings:

  • More than a third of low-paid workers (38.4%) experience a period of worklessness over a four year period;
  • Being low paid increases the probability of experiencing a period of worklessness by around 10%, after accounting for a host of individual, family-level and employment characteristics;
  • Those low-paid workers on temporary contracts, and those with work-limiting health conditions or disabilities, are the most likely to experience a spell of worklessness over a four-year period.

The authors of the report express concern that when many of those workless individuals who were formerly low paid return to employment, it is to a similarly low level of earnings.

“This low-pay, no-pay cycle means many find it difficult to escape low living standards and advance in the world of work.”

In addition, the JRF report highlights  the significant burden on the state of having large numbers of low-paid workers alternating between employment and worklessness, and suggests that significant fiscal savings could be made if job security for those in low-paid positions was strengthened.

While the paper does not propose any specific policy recommendations to tackle the employment insecurity of low-paid work, the authors suggest that several areas of policy offer potential for co-ordinated solutions to this problem, including:

  • extending access to skills and training to those who are in work and lack qualifications;
  • limiting the burden of unplanned absence from work to employers through the targeted re-introduction of schemes such as statutory sick pay recovery;
  • providing support alongside incentives for low-paid workers to progress through in-work conditionality within Universal Credit.

The movement to encourage more employers to pay the living wage has picked up pace in recent months. Organisations such as Citizens UK and the Living Wage Foundation have campaigned to encourage more employers to pay the living wage. Even so, by the end of 2014, only 60,000 people in the UK were covered by this pay rise, with none of the big supermarkets or large care firms involved. Some local authorities, however, including Glasgow, Cardiff, Birmingham, Newcastle and the Greater London Authority, have adopted the living wage.

As the JRF report underlines, paying the living wage to employees results in reduced welfare benefits and extra taxes. Which means that, whether the employer is Tesco or the Archbishop of Canterbury, the living wage can give people basic rights and a sense of dignity in work, while making good economic sense for the nation’s coffers.


Further Reading

We’ve previosuly blogged on the living wage and addressing the causes of in-work poverty.

Other resources which you may find interesting (some may only be available to Idox Information Service members):

Wealth: having it all and wanting more

The benefits of tackling worklessness and low pay

Ten years of the GLA’s London Living Wage

Bare minimum is not enough (living wage)

Low pay Britain 2014

Troubled families approach expands … but is the evidence there?

paper family on handBy Dorothy Laing

Nobody likes the idea of experiencing antisocial behaviour on their doorsteps so further government action to help ‘troubled families’ will almost certainly be welcomed by neighbours and local communities alike.

On 19th August, Communities Secretary Eric Pickles announced an extension of the Troubled Families Programme, as findings from independent research carried out for the Department for Communities and Local Government (DCLG) – National Evaluation of the Troubled Families Programme interim report family monitoring data: a report by Ecorys UK and Understanding Troubled Families – revealed the current state of progress. Continue reading

Three options DWP should explore in supporting those with poor mental health into work


Traffic cone with the text "works in progress".

By Steven McGinty

Last week, the UK government announced a new pilot scheme to support those with mental illness back into work. While similar to other government initiatives, this scheme has the unique selling point of offering treatment at an earlier stage, alongside employment support.

Like many of the government’s return to work policies, this might prove to be controversial. Many have expressed concerns over a comment from the Department for Work and Pensions (DWP) that suggests that counselling could become mandatory for those claiming benefits.  One of the most notable individuals to question this policy is Tom Pollard, Campaign and Policy Manager at Mind. He suggests that,

“If people are not getting access to the support they need, the government should address levels of funding for mental health services rather than putting even more pressure on those supported by benefits and not currently well enough to work.”

Although this pilot scheme has caused some heated debate, this is just one of the many ideas available to the government. Others include:

Aim High Routeback (Easington Pilot), County Durham

This pilot scheme was launched in 2005, as part of the Northern Way pilots, and was said to take a ‘health-first’ approach. The scheme was based in an NHS Primary Care Trust building, with participants focusing on the practical management of their health conditions, and employment only being discussed once individuals had started to make progress with their health. The project reported an above average return to work rate, in comparison with the other pilots. Interestingly, one of the key findings of the study was that participants were more likely to return to work if they felt like their health was ‘good or improving’.

JOBS II Model

This model was developed in the US and involves the use of peer led groups. The idea is that these groups can be used to support those with mental health problems back into employment, as well as prevent the negative health impacts which can arise from unemployment. The programme works on improving the jobseekers’ ability to search for work, as well as to cope with the setbacks of finding employment. The model has been found to be successful and has recently been recommended by the Department for Work and Pensions.

Mini-ICF-APP

This is a measure for assessing patients that was piloted by a community mental health team in Oxfordshire. The pilot involved asking new patients to fill in a 10 minute survey. This survey allowed medical staff to better assess the support needs of patients, as well as to identify their strengths and weaknesses. The staff were then able to offer more targeted referrals and interventions. For example, the use of cognitive behavioural therapy (CBT) or the tailoring of a patient’s medication. The pilot reported that this approach led to an improvement in outcomes for patients.

This is just a small sample of the research on improving the employment prospects of those with mental illness.

At Idox, our database contains all the research highlighted. We also provide an enquiry service, allowing members to receive the support of information professionals, as well as save time on their research.

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