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By Dr Katy Jones
Senior Research Associate
Decent Work and Productivity Research Centre (Manchester Metropolitan University)
Universal Credit – the new working age benefit for people who are unemployed or on a low income – potentially involves the introduction of “in-work conditionality” (IWC), placing responsibilities on individual claimants to increase their earnings (e.g. through increasing their hours/earnings in their current place of work or by taking up additional or alternative jobs elsewhere). 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.
According to the DWP, Universal Credit will help ‘business to grow’ and ‘improve productivity’. However, detail on how this is to be achieved is lacking. The policy of IWC arguably has a number of implications for a range of productivity-related issues, including skills, well-being and the nature of work. Arguably, focusing on individual workers, and emphasising work intensity (i.e. increasing working hours), whilst neglecting to consider demand side issues, such as work quality and management practices seems unbalanced, if ‘improving productivity’ is an aim of UC. Our project (briefing note and full report), supported by PIN, considered these issues through interviews with Owner-Managers and HR Managers representing 12 businesses operating in Greater Manchester.
The employers sampled varied in terms of the nature of roles offered and the contractual status of their staff – some offered mainly full-time positions, others offered mainly part-time roles but required staff to take on additional work as required by fluctuations in demand, some mainly employed staff on zero hours contracts. Productivity was generally understood as being mostly about making efficient use of resources and getting the most out of staff. Particularly for service sector employers, productivity was about providing a quality service in an efficient and effective manner, generally underpinned by a strategy of minimising labour costs. Flexible workforces were considered key to this – both in terms of staff being available to take on more work at times of high demand, and having staff who were willing and able to work in different roles when necessary. Increasing the hours worked by staff was not considered key to efforts to improve productivity. Instead, several employers talked about the importance of improving the skills of staff, including management skills.
Regarding expectations for employees to progress within their firm, employers generally reported that this was something they would consider, but that ultimately whether or not they offered more hours/pay depended on whether there was a clear business case to do so. Capacity for existing staff to take on more hours reportedly varied, and weak consumer demand could make offering more hours difficult. Several employers described opportunities across different departments/partner organisations to take on more hours. However, this depended on the number of hours required, and may not be offered on a permanent basis. Employing staff on a part-time, flexible basis was central to existing business models:
“We wouldn’t want to have every single person on a full-time contract. We’d still need some flexibility to fluctuate with the demands of business levels” (Employer 11, hotel)
Ultimately, the businesses we spoke to explained that their ‘bottom line’ would continue to have more sway than expectations placed on staff, and there was widespread reluctance to increase wages due to perception that this would impact negatively on the profits of the business.
Employers felt that the impact of IWC would depend on a range of factors including business needs, worker responses, and the approach taken (i.e. whether a supportive/sanctions-based approach, and the nature of support). There was a concern that new expectations introduced as part of the policy may be a hindrance to workforce flexibility and it was widely felt that if staff hours increased in response, this would not necessarily be productive for their business. Employers voiced concerns about the potential for it to have an adverse impact on staff (and their business as a result), as it might negatively impact staff motivation and well-being, and lead to absenteeism and presenteeism:
“[It’s] simple, happy team, happy guests…If we have a team who’s burdened with all these headaches, then of course that’s going to impact on our quality, productivity” (Employer 5, hotel)
Employers also felt IWC could lead to increased costs for businesses, incurred through managing recruitment – not only due to increased turnover, but also if more applications were made by others subject to it. Employers complained about the high costs associated with dealing with a high volume of applications, which they felt in part resulted from the existing emphasis of Jobcentres on requiring jobseekers to focus on the quantity, rather the quality of applications and job fit:
“We get people applying for jobs just so they can sign on and say that, ‘Look, I’ve applied and I’ve been for interviews,’ and then waste all our time because they don’t actually want the job… It’s a cost to our business” (Employer 6, social care provider).
A few employers raised concerns that the policy could have a negative impact on employer-employee relationships, and that tensions could arise from mismatches between their requirements and those placed on workers by the Jobcentre. Some employers felt that policymakers should focus more on employer practices, rather than solely on claimants. Supporting employers to be better businesses was felt to be more likely to have a positive impact on both individual progression opportunities and firm productivity:
“It would be probably more beneficial for the government to help employers become better employers, and to make the workplace a more positive environment than it is to push employees to get more jobs” (Employer 10, soft play centre)
Our project has highlighted a number of important issues which policymakers should consider as their ‘in-work offer’ is developed. Importantly, it shows that rigid expectations placed on individuals to increase hours or pay are at odds with the realities of working life in the UK labour market. At a time of low unemployment (and low productivity), the key challenge for policymakers is not moving people into work, but ensuring that, where appropriate, UC claimants are supported into decent and productive work where their skills and capabilities will be developed and used effectively. A ‘work first, then work more’ approach, focused on placing conditions on individual workers fails to consider long-standing issues of poor work quality and management practices, and appears to be at odds with the broader policy agendas focused on improving productivity and the quality of work.
