While government proposals to tackle welfare dependency make sense in theory, addressing structural problems such as poor management, lack of skills investment and too many low-paid and insecure jobs will be vital to make the dream a reality.
According to John Philpott, chief economic advisor at the Chartered Institute of Personnel and Development (CIPD), the plans for welfare reform put forward by Iain Duncan-Smith, Secretary of State for Work and Pensions, are “the most visionary outlined by an incoming UK government minister in a generation”.
His aspiration to make ‘work pay’ and his emphasis on the central importance of work as the best route out of poverty are nothing new. But his appreciation that the most vulnerable in society bear the greatest risk when moving off welfare in terms of losing benefit income, while receiving the least reward in terms of what they can expect from work is “significant”, believes Philpott.
Duncan-Smith’s key challenge, however, is not so much the welfare system itself, but rather “the nature of the wider economic, jobs and workplace conditions, which determine the amount and quality of work on offer to the jobless”, Philpott said.
The problem was that the UK was in the early stages of a “jobs-light” economic recovery that could be stymied by necessary deficit reduction measures. They, in turn, are also likely to limit the money available to the Department of Work and Pensions in order to help the 5.3 million people that are currently dependent on benefits.
The UK currently has “far too many poorly managed workplaces offering low paid, low productivity work and characterised by high rates of labour turnover. This is the root cause of limited work incentives and results in the fast-revolving door between work and worklessness that increases the risk of moving off welfare”, Philpott said.
As a result, to pursue his aims effectively, Duncan-Smith will need to lead a “broader government drive” to fix these structural problems rather than simply focus on reform of the “byzantine” welfare system, he added.
