Thursday 12 January 2012

Work for dole: Theory and Practice

James Higham gives us a good overview of the topic at Orphans:

This is where the gung-ho view "get the buggers off the public purse", a commendable view in terms of those scamming the system, is anything but commendable...*

Another one is the trend with the work programme firms of breaching their brief, which was to put people into sustained employment but instead forcing them, on pain of DWP sanctions, into non-jobs which last a few weeks or a month or two, causing two things to happen.

Firstly, the non-job means that, even with WTCs and other discounts, the person is bringing in about half of what he was before – he loses his rental accommodation and it puts him on the council’s doorstep, where the new trend is “shared accommodation”, as the council has sold off half its properties to pay for the Iceland debacle or whatever. Then he ends up on the DWP’s doorstep again, signing back on.


And this morning's Metro gives us a real life example:

Cait Reilly, who has been looking for work since leaving Birmingham University, was volunteering at a museum until she was ordered to take a work placement at a Poundland store in the city.

The geology graduate spent two weeks stacking shelves and sweeping floors after being told she could lose her benefits if she did not accept the ‘mandatory’ post. She is now asking the High Court to quash regulations that her lawyers claim were created by the government ‘without parliamentary authority’ and ‘forces people into futile, unpaid labour for weeks or months at a time’.

The 22-year-old, who was not offered an interview following her placement, told her Jobcentre Plus adviser of her previous retail experience and that she did not want to give up volunteering at the Birmingham Museum and Art Gallery.


Those who watched that excruciating TV series "Fairy Jobmother" will be familiar with this. All the people for whom the government-funded but privately owned welfare-to-work agency Action4Employment found these unpaid work placements were - unsurprisingly - given their cards again after two or three weeks, i.e. as soon as the period was up for which A4E can collect the back-to-work success fee, giving them a total income of £234.3 million last year. Or possibly there is some employment law that would have given these placees employment rights after two or three weeks, such as the right, er, to be paid?

* As to the "scammers", this is yet another advantage of having a flat rate, weekly Citizen's Income for all, whether working, caring, studying, volunteering, actively looking for work or simply unemployed: there will be no need to take the moral high ground and distinguish between "the scammers who are claiming and working on the side" and the honest majority who are working and who are paid the Citizen's Income as well. Or to reduce churn, the honest majority could choose to have the Citizen's Income offset against their PAYE liabilties, like the Tax Credit in Ireland, only not quite so stingy.

22 comments:

Sobers said...

Here's the Sobers plan for benefits:

All benefits to be rolled into one daily payment. Probably about £50/day tax free. Enough to pay the rent and live on in an average town. Could be adjusted from town to town, based on rents and incomes though.

The only way you can get this daily payment is to turn up at a depot (which every town/area would have) at 9am sharp, and clock in, and do 5 hours labour of a pointless menial type, exactly what to be decided locally. If you are unfit for manual work, something sitting down, like knitting woolly hats for Africans, whatever. Then you clock out, and get your money, paid in cash. Simple as that. No need to register (other than to get a benefits ID card), no need to turn up every day. Just if you fancy £50, the State will give it to you, the kicker being it'll cost you 5 hours of your time. If you refuse to work, you can sit there for 5 hours if you like.

The idea being to a) provide for people who really are destitute and need money to survive, and b) weed out those who either already are working or are too lazy to get up and do what normal people do - go to work everyday for their pay.

Its flexible - lose your job on Friday, and you can be collecting your £50 on Monday. It solves fraud - no-one can be in two places at one time, and you can't get someone to go in your place, as why would they labour for 5 hours and give you half, when they could have it all for themselves as of right anyway?

These depots could have all the job centre facilities integrated in as well, and free office services, so after 'work' people could apply for jobs, prepare CVs etc etc.

The idea being to make collecting benefit really really dull. So dull that you'd rather go and do something else than collect the free £50, but still to have the money there for people who have absolutely no other alternative.

What do you think?

Mark Wadsworth said...

S, a bold vision indeed:

The only way you can get this daily payment is to turn up at a depot (which every town/area would have) at 9am sharp, and clock in, and do 5 hours labour of a pointless menial type, exactly what to be decided locally. If you are unfit for manual work, something sitting down, like knitting woolly hats for Africans, whatever.

Labour realised early on that this would be a fine scam, so that's exactly what they did. Which is why have two or three million more people in public sector being paid £50 a day after tax for doing sweet FA.

Is it not better to give people money and allow them to "work on the side" (i.e. proper work at market rates in the private sector) than it is to give them money and prevent them from doing any proper work?

Richard Allan said...

I don't really buy basic income as a form of welfare. I actually think workfare/job guarantee is preferable. It can be paid at a flat rate of £6.40/hr on a "turn up and work" basis, eliminating the need for any kind of means testing (except for UK citizenship). Millionaires won't claim it because they have better things to do with their time anyway. You can't double-claim because you can only be in one place at a time and there are only so many hours in the day (if they want to work 100 hours a week then good luck to them). It should be adjusted for regional cost of living, natch.

Also I read the same story in the Express this morning and the part of Metro you've quoted is seriously misleading. She applied for the program and accepted the place, making completion mandatory. She claimed not to know this ahead of time, and also claimed not to realise that a job at Poundland entailed stacking shelves (what did she think she'd be doing? Art criticism?)

Richard Allan said...

Dammit Sobers!!

Mark Wadsworth said...

RA, she was ordered to volunteer or lose her dole money. And had Poundland offered her a permanent, paid job, it appears that she would have accepted it.

Anonymous said...

LVT Only makes sense as a tax to get rid of the damaging taxes. So... what PAYE liability?

AC1

Mark Wadsworth said...

AC1, yes, I was just giving an example. Offset it against your LVT liability if you want.

Anonymous said...

Becomes very "circular" then (not saying this is a bad thing at ALL).

In fact I've been thinking that LVT and the "currency" are also near synonyms.

AC1

Fraggle said...

In fact I've been thinking that LVT and the "currency" are also near synonyms.

Sounds about right. If you're going the MMT route, the CI can be used as the vehicle that introduces/removes currency from circulation, although it's still not clear to me how you would know how much/whether to do so.

Mark Wadsworth said...

AC1, yes of course the LVT/CI calculations are circular, and LVT/CI are the currency.

In a way that's bad because it makes it difficult to decide a precise, mathematically correct answer starting from our current ludicrous position, but it's also good because it is easy to come up with a workable answer by starting from scratch and deciding where we want to end up (it is self-correcting).

F, yup, LVT/CI accords with MMT. The CI is just a way of balancing the books of LVT receipts minus core government spending. So all three variables can be known in advance of doing it (mistakes are self-correcting).

Derek said...

The main MMT'ers seem to favour "work for dole", or "Job Guarantee" as they call it, over citizens income. Not sure why. Personally I'd go for CI too. However Warren Mosler at least seems to be coming round to the idea that LVT would be the tax to use for the "controlling inflation" part of their economic policy. So that's good.

Anonymous said...

Sobers

What would stop you turning up and going to sleep?

Bayard said...

Sobers, it wouldn't work, it would upset both the Envious and the Righteous. Your claimants would have to be working during that five hours, preferably hard labour, like sewing mailbags or breaking stones.

Bayard said...

Sobers, it wouldn't work, it would upset both the Envious and the Righteous. Your claimants would have to be working during that five hours, preferably hard labour, like sewing mailbags or breaking stones.

Sobers said...

@Bayard: I realise it would cause the Righteous to virtually spontaneously combust (in fact that might be a feature not a bug), but what do you mean about the Envious?

Who could be envious? If they wanted the money they could give up their jobs and do it too.

I don't think the 'work' needs to be hard, just boring. Mind numbingly dull in fact. Maybe just sitting in a chair for 5 hours with nothing to read. Basically you are trying to weed out all those who could, if push came to shove, get a job, but still provide money for those who have no other alternatives.

If the alternative to sitting staring into space for 5 hours in a warm room every day was living in a cardboard box and starving, I know which I'd do. But equally I'd rather get a job that used my brain and or brawn than do that.

Sobers said...

It also occurs to me that my plan would have the added benefit of keeping all the chavs off the streets for 5 hours a day. Thats got to be a good thing on its own. Think of the reduction in crime!

Bayard said...

"Who could be envious?"

Who indeed? but there are people who will take the attitude "I work hard for my money, why sould some chav get it for doing nothing".

Anonymous said...

Certainly if we'd have a CI and no minimum wage, anyone would be able to find mindnumbing work for low pay if they'd want, and a bonus, they'd actually produce what someone wants.

-Kj

Mark Wadsworth said...

D, the general impression I get is that MMTers are deficit spenders, but that does not detract from the fact that their model of money creation and destruction is very realistic. Do they, collectively, have preferences for one form of taxation or one form of welfare over another? I don't see why Georgism is in any way incompatible with MMT.

S, your idea is the sort of ludicrous nonsense which politicians keep coming up with, and unfortunately keeps getting them elected. So go for it, you'll be Prime Minister before Bayard is.

B, politically, Sobers' idea would work a treat. In practice it wouldn't work at all, it would have all sorts of unintended consequences, it would be hugely expensive and would ultimately increase unemployment. But yer average voter doesn't care about that, the average voter is just small minded, one sided and vindictive.

Mark Wadsworth said...

Kj, exactly.

The CI is a good replacement for the welfare system, but if it's funded from LVT, clearly it is only everybody's small share of national rental income, and it's impossible for everybody to live off rental income. By and large, CI would be enough to cover your LVT bill, or the rent on somewhere very small and cheap, but no more than that. Anything more than that, you have to go out and work.

Derek said...

Oh, I agree. I think that MMT is extremely compatible with Georgism -- although there are Georgists who think otherwise -- and If I Ruled the World (or the UK at least), I'd want to implement the Single Tax LVT/CI for my fiscal policy and to use MMT principles to adjust them and hence control the money supply.

As for the MMT'ers being deficit spenders, I think that's fair. However I think that they would say that you need a deficit of around the same percentage as the growth in size of your economy so that the volume of money to goods and services remains about the same, and hence the value of a pound remains the same. Looking at it that way you should have a balanced budget when there's no economic growth and a budgetary surplus when your economy is shrinking. On the other hand you could go for a balanced budget all the time as long you were happy with having the pound rise in value when there was economic growth and fall in value when there wasn't.

At least I think that's what would happen. If I'm wrong, perhaps you or Ralph M can give us the true story.

James Higham said...

Sobers makes a good point on the flat rate.

Also:

Or possibly there is some employment law that would have given these placees employment rights after two or three weeks, such as the right, er, to be paid?

This is the game just now and next Wednesday for me should be instructive. Shall report.