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December 13, 2008
The government’s latest welfare reform is a combination of providing help for the long-term unemployed to seek work, and punishments for those who refuse to search, ranging from loss of benefits to community service work.
Although welfare reform is long overdue the language surrounding the announcements has been focusing on the so-called culture of dependency, and has in my opinion tended to tar all benefit claimants with the same brush. Although there are undoubtedly a number of people who ‘play the system’, in the words of Work and Pensions Secretary James Purnell, we must recognise that there is such a thing as involuntary unemployment. Both the Conservatives and Labour are likely to back the plans, with the measures sounding in large parts like previous Conservative plans, however I hope that a Labour government is likely to put greater emphasis on helping the unemployed, back into work, rather than simply punishing those who ‘fail’ to find work.
In neo-classical economic theory we tend to assume work is a disutility, in which case punishments might be the better remedy. However theory is moving on, and the work of economist such as Andrew Oswald here at Warwick, indicates that for many people work can be a utility, connecting individuals with society, and providing them with a sense of worth and status. Therefore many people on welfare would be willing to work, but have lost faith in their ability or whose skills have been eroded by inactivity. For these people, well targeted government help could be beneficial.