Horner's Corner

Workfare and the cost of benefits

by on Nov.13, 2010, under economics, politics

This letter by Guy Standing is so clear and to the point it deserves as wide a readership as possible:

Those discussing welfare reform should learn some basic economics (Hardship payments to be scrapped, 12 November). The main reason there is high unemployment is that there is insufficient aggregate demand. A second reason is that a market economy needs some unemployment, for efficiency and anti-inflationary reasons. The move to therapy for the unemployed, which Labour pushed, and the workfare scheme of the coalition government, treat unemployment as mainly due to behavioural deficiencies by the unemployed. This is nonsense.

Workfare rests unashamedly on the view, stated by the government’s American adviser, Lawrence Mead, that welfare should be made so unattractive that the claimants will take any job and that they should be encouraged to “blame” themselves. There are many reasons for believing workfare is misguided and ultimately vicious. I have reviewed the evidence in several books, and years ago predicted that this is where the neoliberal state would end.

The objections to the government’s scheme and to the Labour party’s current position include cost. Workfare has proved extremely expensive, and it only manages to be less so because it drives people off welfare and out of the labour market, not into jobs. Guaranteeing the unemployed a job for four weeks is a sleight of hand. What jobs? The likelihood is that they will be “make work” schemes, scarcely of the type to motivate people. They will disrupt any search for meaningful activity, and could intensify any adverse attitude to jobs. If they were real jobs they would lower the opportunity and wages of others already doing or hoping to do such jobs.

But worst of all, coercion will be advanced. There is no evidence that vast numbers of people are suffering from a “habit of worklessness”. Many of those not in jobs work hard, caring for frail relatives or children, dealing with episodic disabilities, and generally working. Building social policy on the basis of a tiny minority being “scroungers” or “lazy” is expensive illiberal folly. Much better would be to go in the other direction, delinking basic income security from jobs and then improving incentives for work of all kinds.

Guy Standing

Professor of economic security, University of Bath


Letters: Workfare and the cost of benefits | Politics | The Guardian.

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