W2A-013 Work and welfare-0.txt
Part time work

From the point of view of unemployed men's labour supply, 'flexibility' about moving off the unemployment register and into part time work cannot be separated from the question of pay flexibility or inflexibility. At the time of study, family income supplement could only be claimed if the person was working more than 30 hours per week. Since April 1988 family credit can be paid to those working more than 24 hours per week. This means that a man (or woman) could now take a 'part time' job of 24-30 hours per week and claim family credit whereas he or she could not have claimed family income supplement. However, this would entail a very heavy reliance on family credit: that is, it would make up a high proportion of total income (40-50 per cent, for example). As the previous section showed, this is not a situation which is perceived positively by unemployed people. Family credit as a 'top-up' of £ 10- £ 20 a week is an acceptable risk, but family credit as half of one's income is perceived as a high risk strategy.

Men could, of course, take up part time work and remain on income support. In doing so, their earnings are then considered as a top-up of benefit and come under the disregarded earnings provision of income support. Nationally, and in this study, use of disregarded earnings provision is low (11 per cent in this study and about 5 per cent of unemployed people on income support nationally in 1989, (DSS, 1989). The net effect of male unemployment in these couples was to discourage wives from taking up or keeping on part time work and to discourage men from taking up part time work (less than 24 hours a week) while unemployed.

At the time of this study, unemployed couples could each earn up to £ 4 per week net of work expenses before their supplementary benefit was affected, and thereafter deductions were pound for pound. Under income support, this has since been raised to £ 5 a week each, inclusive of work expenses, for the first two years of unemployment, and a joint £ 15 a week thereafter. Most couples had some basic knowledge of the arrangements for disregarded earnings, though they were much less likely to know that under supplementary benefit the figure was net of work expenses. The reason why most did not exploit disregarded earnings was that the return was too small particularly when weighed against possible disruptions to benefit receipt. Most people felt it was unlikely that they could find a job paying just the level of disregarded earnings and thus were aware that they would have to take a job paying more and have deductions from their benefit. Some had done this in the past and they had experienced a considerable amount of 'hassle' from their local social security office as a consequence. Benefit was totally stopped while proof of earnings were sought, deductions greater than earnings minus £ 4 (or more rarely £ 4 plus work expenses) were made, and so on. Because of the low incomes claimants had and the fragility of managing on low incomes, such disruptions were serious matters indeed and experience of them prevented the take-up of subsequent part time work. Even those without direct experience of such 'hassle' were aware that any change of circumstances carried a high risk of disruption in the receipt of benefits, and could readily imagine the 'hassle' that would ensue from earning more than the disregards limit. The net gain from such 'hassle' was considered too low when weighed against the high risk of benefit disruption.

Not only did this result in very few families enhancing their living standards by combining some earnings with benefit receipt, but it also had an indirect effect on couples'labour supply in relation to other forms of work. As the previous section has shown, the strategy adopted was one of the 'family wage' earned by one partner, with possibly a relatively small top-up of in-work benefits. Because wives were generally not employed when their husbands were unemployed, husbands were attempting to find full time jobs which would pay enough to keep the whole family rather than finding lower paid full time or part time jobs supplemented or complemented by wives'earnings. Such a strategy thus raised the wage (or income) sought by unemployed men. It was difficult for the families to envisage adopting a strategy based on two low or part time wages because this would have required both partners to find jobs simultaneously.

Temporary, seasonal and casual work

Labour supply flexibility of unemployed men and women in respect of temporary, seasonal and casual work was also affected by the structure and administration of the social security system. Skilled men and men in rural areas in particular were aware that there were opportunities for full time work of short duration, usually one to three weeks. Women were aware that there were temporary, often seasonal (either Christmas or summer/holiday relief, typically 4-8 weeks), work opportunities, both full time and part time, which they were not seeking. Why was this the case?

If such work was not to be treated as disregarded earnings (in the same way that regular small amounts of part time work are), then the only option was to sign off benefits completely, work for a short time, and then make a fresh claim. There were a number of problems with such a strategy. Firstly, because such work was of short durations (and often low paid), in-work benefits could play no role from a practical point of view. Secondly, new claims for income support can and frequently do take several weeks to be processed (rarely, at least in the experience of these claimants, are claims processed and paid within one or two weeks).

As a result, signing-off and signing-on again carried a high risk of being followed by a period with no income. The earnings offered by casual and temporary work were unlikely to be high enough to carry the family through an 'incomeless' period, and the net return from such an exercise was likely to be a loss, zero or very little gain indeed.

Two alternatives to this strategy were possible, the first of which was to remain nominally on income support and have one's earnings disregarded. As with part time work, this carried a high risk of loss of benefit and/or delay of benefit accompanied by only a small net return. The second alternative was not to declare such work. This alternative had been adopted by a small number of people in the study: 5 out of 110 had some undeclared earnings and 3 more had had undeclared earnings in the past. Most undeclared earnings were either highly variable from week to week or took the form of occasional lump sums for specific jobs. In contrast, the arrangements for disregarding earnings were very inflexible indeed, calculated as they are on the basis of regular weekly earnings, of the same amount each week.

Summary

The position as regards labour supply flexibility of unemployed men and the wives of unemployed men can be summarised as follows. Men and women were flexible as regards the type of work they were prepared to do. But men did not seek or apply for 'women's jobs'. The main reason they did not do so was the very low pay involved: 'women's jobs' generally paid less than even unskilled 'men's jobs' in the same economic sectors. Men did apply for low paid jobs and they applied for jobs which paid less than their reservation wages and less than average earnings for the type of work concerned. They did not, however, apply for very low paid full time jobs. The men attempted to earn close to a family wage, with in-work benefits acting as a top-up or small supplement, not as a 'partner' to earnings, and women's earnings did not enter the picture at all. This was because women were not likely to work part time while their husbands were unemployed because of the low level of earnings rules and the risks of benefit disruption if more than the limit was earned, while women were unlikely to achieve anything near to a 'family wage' from full time work. Flexibility in respect of full time, part time and short duration work was thus constrained by the structure of benefits. The result was that, despite the fact that most men and women wanted to work and barely managed on their benefit incomes, the majority of families had no work or earnings whatsoever, were largely excluded from the 'flexible' work forms increasingly prevalent in their local labour markets, and were unable to respond positively to the higher level of demand for female than male labour.

THE ROLE OF SOCIAL SECURITY POLICY IN THE 1990's LABOUR MARKET

Major constraints on flexible participation in the labour market therefore arise not from the intransigence or inflexibility of claimants but from the reform, including the April 1988 social security reforms (which the relevant Green Paper hailed as the most fundamental review since Beveridge), has done virtually nothing to remove these inherent rigidities. Policy for the foreseeable future appears to be based largely on what has gone before, pervaded by a distinction between full time and part time work which has become more and more artificial.

More of the same

In the last two reviews of supplementary benefit, the main constraint on encouraging part time work by extending provision for disregarded earnings has been expressed by government as the danger of undermining incentives for full time work. The result has been that the concern not to undermine full time work incentives has in fact undermined part time work incentives - in some labour markets the only incentives that have any practical meaning - with the result that few unemployed families do any paid work.

The higher level of disregard of £ 15 per benefit unit after 2 years of unemployment introduced in 1988 is in nominal terms more generous than the previous disregard, although not in real terms (Bradshaw, 1985), and work-related expenses can no longer be discounted. For those (mainly wives) doing regular part time work the higher disregard will mean that fewer hours need be spent working for nothing, although £ 15 represents no more than a day's work and 2 years have to pass before even this much is retained. For those, usually men, whose earnings take the form of episodic lump sums exceeding the value of the disregard in the week they are earned, the incentive not to declare them or not to participate in such work will hardly be any less.

In the context of increasing labour market flexibility and increases in long term unemployment, a more appropriate policy response would be to calculate disregarded earnings over much longer periods in recognition of the fact that it is not always possible to earn small amounts every week. For those who are able to take up occasional work opportunities as they arise, such a system would allow them to support themselves from earnings when work is available without sacrificing the support of benefit when it is not. If that were the case, some undeclared earnings might be regularised and brought into the open.

In addition to the marginal extension of disregards of part time work, a second theme in recent policy has been the promotion of in-work benefits. This promotion of in-work benefits was foreshadowed in 1988 training White Paper (DE, 1988, p.31) which identified the greater use of these benefits as a source of public expenditure savings by encouraging more of the unemployed to consider low paid work with earnings supplemented by benefits. The aim, then, is to reduce the level of wages sought by unemployed people with children by encouraging the view that wages are not the only component of in-work income. Claimant advisers in the Employment Service have been given the task of promoting the consideration of in-work benefits by unemployed people and an extensive television and poster advertising campaign began in August 1988.
