Tuesday 9 November 2010

Workfair? Why carrots, not sticks, deliver better results

In this guest post previewing Thursday's welfare reform white paper, Kris Krasnowski says that government proposals of compulsory work placements for the long-term unemployed have been influenced by "workfare" policies with a weak record of helping people to improve their job prospects. An alternative, less coercive approach, which uses 'nudge' insights to make a positive offer of work experience and volunteering the norm, would deliver better results.


Iain Duncan Smith’s grand plan is to reform the welfare state and make it fit for purpose in the 21st Century, but on the evidence of his workfare ideas they are still very much rooted in the 20th Century.

Workfare is a longstanding welfare reform of the political Right. It grew to prominence in the early 1990s and was partially successful in reducing welfare rolls in New York (and other parts of the US). However, these reforms were not the sole reason behind the major reduction in welfare and many people who worked for their benefit didn’t end up in work or better jobs. Advisers close to IDS and the Prime Minister may not agree, but workfare isn’t the silver bullet that is often advocated from experts from across the pond.

This is a point not lost by IDS’s own Department, who in August 2008 published a report which reviewed workfare programmes from the US, Canada and Australia. (PDF).

Whilst the authors’ acknowledge that it is difficult to isolate the impact of ‘workfare’ from other back-to-work support as part of the wider welfare to work offer they do suggest that:

· Workfare is effective in reducing welfare caseloads, but often more as a deterrent forcing some people to stop claiming or leave welfare prematurely;

· There is little evidence to suggest it helps people into work and it can actually reduce employment chances because of stigma effects and graduates of workfare programmes displaying skills that are not compatible with employers;

· Workfare is least effective during tougher labour market conditions such as high levels of unemployment or where employers have greater choice in the labour market due to increased levels of competition; and

· Workfare is least effective for those individuals facing multiple disadvantages and can lead to sanctions for these groups resulting in some individuals and their families having no income whatsoever.

Despite these arguments I can see why the Coalition Government thinks introducing workfare could be the answer. High levels of unemployment and welfare dependency persist, work incentives are often poor and many of today’s long-term workless have little or no experience of work. Evidence also suggests that work experience and volunteering can improve employment chances.

Surely any type of work experience is worthwhile then? Evidence and common sense suggest not.

A large number of welfare to work providers in the UK already offer work trials or employers the chance to “try before they buy” new employees before they fill their posts. These initiatives can be successful, but success often is achieved through full participation and participants being fully motivated and brought into the process. And it is here where workfare comes unstuck for me. The stick just isn’t going to deliver motivated, engaged jobseekers and is likely to result in difficult participants and workfare opportunities that are sub-standard at best – pretty much in line with DWP’s own research then.

However, perhaps there is another way to bring IDS’s work plans into the 21st Century.

A couple of weeks ago some colleagues and I at the London Development Agency published a short paper called Behaviour Matters (PDF) where we argued that behavioural economics or “nudges” could be deployed better to complement existing employment policy.

One of our findings suggested that more could be done in the existing conditionality regime to enable jobseekers to volunteer or undertaking work experience whilst claiming benefits. Not only could this be socially desirable, but also helpful as part of a back to work plan.

Our idea is to create an auto-enrollment volunteering or work experience scheme (managed by providers as is the case in the current plans) where individuals would be required to opt-out from taking part.

This default option would quickly become the “norm” and should be introduced early in the claim process alongside an intensive social marketing push that frames the scheme correctly and focuses on the benefits of volunteering or work experience. I believe that such a scheme would be a positive, modern alternative to workfare and may result in private sector companies also taking part – something that many workfare schemes are unsuccessful in achieving – that could drive up the quality of opportunities and experiences of jobseekers.

Whilst this idea may not solve the extreme cases where sanctions remain the only viable option, it is a twist on workfare that looks to draw out the positive experiences associated with work experience and volunteering and use them to aid employment opportunity rather than prevent it.

Kris Krasnowski is currently editor of the London Development Agency’s labour market research series. Prior to this he worked for a leading US welfare to work provider and spent 6 years working in Whitehall on labour market issues at the Treasury, DWP and formerly DfES.


Anonymous said...

You allow this man space on your site why? He's obviously a top professional? Firstly, we already have what IDS proposes it's called New Deal and was implemented under 'New Labour'. As a man researching the 'labour market' through his lovely little institute you'd have thought he would have known about this. Secondly. He talks of encouraging or engaging people back into the labour market as if that's the panacea for unemployment and the ills of capitalism. Where these jobs and compliant employers are going to come from he doesn't expound on. May be he should be asking the questions regarding why unemployment in every 'free market' economy is high. This may give him an answer that is unrelated to his nice little earner and that could mean that, like the poor disillusioned scroungers he's so readily and eagerly trying to find the unemployment solution to, he is but another surplus to requirements human being

Sunder Katwala said...


Critical - even harsh - comment welcome. The author is a Fabian member who offered the piece, and I thought the proposal was interesting. While it will not solve the issue of unemployment, I can't myself see strong grounds to object to the non-coercive proposal put forward.

The issue of where are the jobs is important - otherwise we risk offering responsibilities without rights. This should open up more radical thinking about political economy, but there might be interesting alliances on that.

So James Purnell, who is on the right of the Labour debate, in supporting the thrust of many of the government's welfare reforms as offering much continuity with his policy, argues that "job guarantees" are the route forward, and I would have thought on that proposal he would find common ground with a good part of the centre-left and left of the party, who have not been his natural allies in these debates, to say the least.