CIPD research outlines key steps to 'making work pay' as Universal Credit is implemented

  24th January 2014      
 Company News

The CIPD has released research exploring the awareness and attitudes of job seekers on the move to Universal Credit (UC), as well as their opportunities to transition from benefits to employment. Universal Credit, which merges several benefits into one, is being rolled out in phases between April 2013 and December 2017.

The report, ‘Making work pay: Implementing Universal Credit,’ suggests four key steps to policy makers on how they might better assist a smooth transition to Universal Credit for job seekers.

1)    Communicate and explain the concept of Universal Credit to claimants well in advance of any full scale roll-out to ensure it is not undermined by a lack of information and negative perceptions.

2)    Ensure financial education is provided to claimants that need it, to help them manage their personal/household finances as they transition from fortnightly to monthly payments.

3)    Improve the co-ordination between Jobcentre Plus and the available support for job seekers to access training or careers guidance before they are classified as long-term unemployed.

4)    Proceed gradually with ‘in work conditionality’* – requirements placed on Universal Credit claimants in employment to increase their earnings to a minimum threshold.  It should initially be based on the provision of information, guidance and support rather than on mandatory requirements, for example to work additional hours or get a second job – at least until labour market conditions change and/or evaluation evidence and pilots provide evidence that a stricter approach will produce overall economic benefits.  Any conditions for receiving benefit which are applied for Universal Credit claimants who are already in work should be minimal and light touch.

Ben Willmott, CIPD Head of Public Policy, said:
“Encouragingly, our focus group discussions with job seekers reveal that once they understand the rationale behind Universal Credit and the potential advantages for them, they generally overcome their initial concerns and have positive views towards this major reform. Government needs to ensure that there is a concerted communication campaign highlighting the advantages of the reforms compared to the current system before any national roll-out.

“Our research suggests the move to monthly payments is likely to be one aspect of the transition to Universal Credit which could cause challenges for some claimants who find it difficult to budget beyond week to week, suggesting that some sort of financial education should go hand in hand with the implementation of Universal Credit for those people likely to struggle.  Many job seekers are also concerned about the risk of unforeseen problems arising from the change – such as IT problems – leaving them without money, and the more the government can do to reassure claimants on this point the better.
“The unemployed people in our sample were almost without exception motivated to find work and likely to be comfortable with the new Claimant Commitment which sets out what claimants who have been judged fit to work will have to do to prepare for work or find work while claiming Universal Credit. However, our research does pose some questions for how the concept of ‘in-work conditionality’ should be introduced. According to our survey of employers and one based on 2,000 employees the opportunities for low paid Universal Credit claimants to increase their earnings is likely to be limited, certainly until there is significant further improvement in the labour market. For example, just a fifth (22%) of employers reported a high level of opportunity for low-paid employees to work additional hours or boost their pay through improving their skills (17%).

“The majority of low paid staff in our sample are part-time workers who work these hours either because their employer doesn’t want to – or cannot – offer more hours or because family or other caring responsibilities prevent them from working more hours. In addition, low paid staff are less likely than higher paid workers to benefit from training opportunities that might boost their earning potential. Consequently placing mandatory requirements on Universal Credit claimants to work more hours, improve their skills, or take on a second job is unlikely to be effective or regarded as fair.”

Other key findings include:
Many job seekers complained that there was a lack of support from Jobcentre Plus and that the focus was on ‘ticking boxes’ to check they are eligible for benefits rather than helping them get back to work. Job seekers who had experience of the Work Programme were generally positive about their experience because of the greater level of support provided.

Low paid staff (those earning less than £216 per week) are much less likely (33%) than employees as a whole (52%) to have received training in the last year. Just 29% of low-paid employees cite getting a second job as providing their best chance of earning more money in the next 12 months, while 24% cite increasing hours with their current employer.

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