Work must pay: Does it? Precarious employment and employment motivation for low-income households

asn article by Lucie Trlifajová and Jakob Hurrle (Charles University, Czech Republic) published in Journal of European Social Policy Volume 29 Issue 3 (July 2019)

Abstract

One of the core dilemmas of current welfare politics is the question of how to ensure social protection while providing incentives to seek employment at the same time. A way to address this dilemma is to base policies and policy models on the principle notion that ‘work must pay’; in other words, income from employment should be higher than the social support of the unemployed.

However, how accurately do these approaches and models represent the reality of benefit recipients, particularly in the context of increased employment precariousness?

In this article, we use the cases of two disadvantaged regions in Czech Republic in order to contrast the presumptions of ‘making work pay’ policies with the everyday experience of welfare recipients. As we show, their situations are strongly shaped by current changes in the labour market, particularly the precarious character of accessible employment and high levels of indebtedness.

The modelling of financial employment incentives and the public policies based on these calculations often do not correspond with the reality of welfare recipients that are often cycling in and out of precarious forms of employment.

However, the authors’ main claim is that the very idea of the ‘work must pay’ approach focuses on the wrong question. A truly functioning financial incentive would need to focus not solely on the difference in income between those who work and those who do not work, but rather should analyse what type of arrangements allow working households to rise permanently above the poverty line.

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Reforms to the welfare system begin

Department for Work & Pensions press release on 28 March

April heralds a number of changes to the benefits system as part of the Government’s welfare reforms.

These changes will make work pay, improve support for disabled people, and help ensure the benefit system is financially sustainable in the future, whilst still supporting those who need it.

The changes are:

• April 1 – Removal of the Spare Room Subsidy: Working-age tenants in the social sector will receive Housing Benefit for the number of bedrooms their household needs, bringing the rules in line with the private sector. Housing Benefit will no longer pay for spare bedrooms.
• April 1 – Crisis loans and community grants replaced by local provision: The full funding for this will be given to local authorities or devolved governments, who are best placed to ensure this money goes to those who need it the most.
• April 8 – Personal Independence Payment introduced: New claims for PIP will start with the Bootle benefit centre. Bootle will handle the claims from areas including Merseyside, North West England, Cumbria, Cheshire and North-East England. PIP replaces Disability Living Allowance for working-age claimants.
• April 8 – Benefit Uprating: The State Pension will increase by 2.5% because of the triple lock. Working-age benefits and tax credits will be uprated by 1 per cent. Disability benefits will continue to be uprated in line with inflation.
• April 15 – Benefit cap: Households on out-of-work benefits will no longer receive more than the average weekly wage after tax and National Insurance. To begin with, this rolls out in four London boroughs, and then nationally in the summer. Those on Disability Living Allowance and Working Tax Credits will be exempted.
• End of April – Universal Credit rolls out in pathfinder areas: Some new claimants will receive Universal Credit, which is replacing the six main out-of-work benefits to simplify the benefits system and make work pay.

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