Sanctioning job seekers who refuse zero-hours contracts is counterproductive
Yesterday’s announcement that jobseekers risk being sanctioned if they turn down a zero-hours contract has caused concern from many quarters. The news – that with Universal Credit allowing for real-time changes in benefits, jobcentre coaches could “mandate zero hours contracts” - was originally made by Employment Minister Esther McVey and separately confirmed by an official DWP statement.
This has caused some confusion, not least because business secretary Vince Cable had previously made it “absolutely clear” that jobseekers would not have their benefits stopped for refusing zero-hours jobs. Labour has requested clarification and several MPs have already criticised the policy. Shadow Work and Pensions secretary Rachel Reeves said the growth in “exploitative” zero hours contracts – whose numbers have now reached 1.4 million – should be stalled rather than encouraged, while Gillian Guy, Chief Executive of Citizens’ Advice has criticized the forcing of jobseekers into the “Russian roulette of zero-hours contracts”.
It is clear that the additional sanctioning that this new policy allows could cause hardship and disengagement for more and more people. But more than this, it’s clear that the policy is counter-productive in terms of getting people into sustainable jobs and ultimately reducing the welfare bill.
If the welfare system is to be truly enabling, empowering, and effective it needs to take an Early Action approach, focusing upstream on enabling people to be both resilient and ready to take the most of opportunities that come their way. Such an approach should reduce the need for late interventions responding to crises, and thus is the fairest and most effective way to reduce the social security bill.
The idea of sanctioning people for not taking zero hours contracts is a prime example of welfare failing to take an early action approach. Zero hours workers earn on average a third less than those on permanent contracts. Zero hours workers are more likely to be underemployed – with 29% saying they are trying to get more hours. And zero hours workers also suffer increase in employment insecurity.
That’s not to say that for some people flexible, part-time and short duration work isn’t important – for some this definitely can act as a stepping stone into more sustainable work. That is why Universal Credit’s ability to adjust to variation in people’s working hours is so important, removing a key barrier between benefits and work and preventing people being ‘stuck’ by complexities of moving between the two.
However, using sanctions to push people onto zero hours contracts is likely to mean that people who are trying to improve their employment prospects in other ways – by applying for more long-term jobs, or by undertaking training – are instead forced into lower paid and less secure employment. Zero hours contract definitely don’t work for everyone, and simply leaving Universal Credit to pick up the tab when employers don’t provide the hours won’t help.
Using a blunt one-size-fits-all sanctions policy to push jobseekers onto zero hours contracts could thus increase the need for other in-work benefits (like housing benefits) or tax credits. It could also prevent people from taking part in training or applying for other more sustainable jobs, again leading to problems further down the line. Importantly, it does nothing to encourage employers to improve their employment standards or, or to provide people with routes to progress: if anything by providing extra labour it encourages further proliferation of zero hours. This is just the type of short-term thinking which is a real block to early action.
The recent passing of the overall welfare cap into law makes it more important than ever that our welfare system takes an early action approach, and it’s clear that pushing people towards vulnerable employment is not going to help towards this aim.