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Universal Credit and active labour market policy – why the voice of employers needs attention

UK active labour market policymaking has traditionally centred on the behaviour of individual jobseekers, whilst largely ignoring the role of employers, writes Katy Jones from Manchester Metropolitan University.

As job creators, and those ultimately in control of the job opportunities that claimants are seeking to access, this is an important gap. But employer voices and experiences are often missing from research and policy debates.

For decades, UK ALMP – or the conditionality applied to working age social security claimants – has been underpinned by a ‘work first’ approach. Here, fast work (re-)entry is emphasised, with jobseekers required to make a high volume of job applications. While we’ve seen a temporary hiatus in conditionality for Universal Credit and other legacy benefit claimants following the first UK lockdown, it appears to be ramping up again as the UK is unlocked and we start to get back to ‘normal’. Alongside this, new employment programmes like Kickstart and Restart have been developed for young unemployed people and those who have been out of work for 12 months or more.

Employers and the opportunities they offer are critical to the outcomes of such policies and programmes. This applies both in the immediate term, as new measures are introduced to respond to the fallout from the Covid-19 induced economic crisis, but also in the longer term to inform the future direction and shifting territory of UK ALMP which started pre-pandemic and as UC is fully implemented.

Programmes that don’t work for businesses won’t work for jobseekers

At a practical level, job creation programmes such as Kickstart, which rely on businesses to create job opportunities, must work for employers. This is particularly important in the current economic climate, as many employers are fighting to keep their businesses afloat.

However, the launch of the Kickstart scheme exposed the problems with a lack of employer involvement in the design of such interventions. When initially announced, a need to offer 30 or more placements in order to apply directly drew immediate criticism from the small business community. Whilst since rectified, as the Federation of Small Businesses put it ‘better late than never’, this exposes a policy blind spot that risks future employer engagement in the provision of opportunities for jobseekers.

More generally, previous research has shown that employers can be turned off engaging with Jobcentres and other employment services, where candidates put forward aren’t well suited to the job roles they are offering. In our small pilot study back in 2019, an employer from the hospitality sector explained that they “very rarely advertise now with the Jobcentre because the people in the Jobcentre don't have the knowledge about our hotel or the industry”. In the current context, managing the burden of high volumes of unsuitable applications is likely to be one thing employers would rather do without as they strive to keep their businesses going.

While attention has shifted towards interventions to tackle the immediate fallout of the Covid-19 pandemic, UK policymaking in this area remains at a critical juncture. In an unprecedented move, Universal Credit may involve the introduction of “in-work conditionality” (IWC), placing responsibilities on claimants who are in work to increase their earnings (eg, through increasing their hours/earnings in their current place of work or by taking up additional or alternative jobs elsewhere). As is well established for out-of-work claimants, these expectations may be backed up by support (for example, through advice from Jobcentre Work Coaches, or access to training), but also by penalties (benefit sanctions) if individuals do not comply with mandatory work-related requirements. The precise parameters of this policy are not yet in place – the DWP is trialling different approaches and consulting via the In Work Progression Commission. But whatever the outcome, understanding the implications for businesses and how they might respond should be high on policymakers’ agendas.

Our research based on interviews with employers back in 2019 suggests that rigid requirements for in-work claimants could be at odds with UK’s flexible labour market, and could fail to reflect many employees’ needs and responsibilities outside of paid work. Employers raised concerns that in-work conditionality might result in lower well-being and motivation amongst workers, and highlighted the potential for tensions to arise, should Work Coach and employer requirements clash. A restaurant’s HR manager told me: “What worries me is the impact that it will have on businesses which haven't really been thought about… I think there's a huge amount of pressure put on employers, which doesn't necessarily get considered when they (the government) are launching new things.”

In line with recommendations from research centred on claimants’ experiences, employers in this study favoured a more supportive enabling approach, rather than a ‘work first, work more’ approach backed up by the threat of sanctions.

In a new project, supported by the Economic and Social Research Council (ESRC), we will explore in more depth employers' views and experiences of UC and their engagement with agencies like the Jobcentre. Please contact to find out more.


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