Understanding the impact of Jobseeker's Allowance
A hard copy of this report summary can be obtained by contacting Paul Noakes [E-Mail: Paul.Noakes@dwp.gsi.gov.uk] or by writing to him at the 'Social Research Division, Department for Work and Pensions, 4th Floor, Adelphi, 1-11 John Adam Street, London WC2N 6HT'.
Research Report No. 111
By Alison Smith, Rachel Youngs, Karl Ashworth, Stephen McKay and Robert Walker
Jobseeker's Allowance (JSA) was introduced in October 1996 and replaced Unemployment Benefit (UB) and Income Support (IS) as the benefit for unemployed people seeking work. As part of the evaluation of the new benefit, the Department of Social Security, the Benefits Agency, the Department for Education and Employment and the Employment service commissioned the Centre for Research in Social Policy at Loughborough University to carry out a series of large-scale surveys. Two separate samples, some 10,000 unemployed people in total, were compared under the old and new benefit regimes. Respondents in each cohort were interviewed twice, approximately six months apart. The research examined issues such as the characteristics of unemployed people and their partners, jobsearch strategies, the quality of 'return to work' jobs, and factors associated with movement off benefit. This, the final report in the series, takes into account the effects of the growing economy upon unemployment levels; and aims to provide a complete picture of the impact that JSA has had upon clients and the labour market.
The main findings are that:
- JSA has resulted in significant increases in movements off the claimant count. The greatest changes have occurred in areas of low unemployment and amongst longer-term clients.
- Both before and after JSA, two-thirds of people who left benefit moved into work. The majority of return-to-work jobs were stable, especially for those who had experienced only a short spell of unemployment.
- Former jobseekers were less likely to return to benefit after the introduction of JSA; and those who had left benefit for work were less likely to return to unemployment-related benefit when they lost their jobs.
- There was a significant increase in the numbers of jobseekers contacting employers directly, suggesting that jobsearch behaviour has become more active since the introduction of JSA. Clients were more likely to be given jobsearch advice and told of job vacancies by jobcentre staff after the introduction of JSA.
- Jobseekers claim to understand the rules better under JSA, and awareness of benefit sanction as a consequence of failing to actively seek work increased significantly after the introduction of JSA.
- The economic activity of individuals continued to influence that of their partners after the introduction of JSA. Other factors that influence partners' economic activity include household type, and the level of local unemployment.
Introduction
JSA was introduced in October 1996, increasing the emphasis of provision away from social security as a passive response to unemployment towards a more active focus on finding work. This report brings together findings from quantitative research that was designed to evaluate the impact of Jobseeker's Allowance.
The research was based on a 'before and after' design which involved conducting survey interviews with two nationally representative samples of 5000 unemployed people. One sample was drawn before the implementation of Jobseeker's Allowance, the other afterwards. Each sample was divided into two parts, a sample of people who had been unemployed for less than two weeks and a second comprised of people who had been unemployed for longer. In each case two waves of interviews were conducted separated by an interval of six months.
There were many other policy developments during the course of the research including the election of the new Labour Government and the introduction of New Deal for Young People. An unprecedented fall in the level of unemployment also occurred with improved labour market conditions being recorded in all of the Employment Service offices in the sample. Wherever possible, account is taken of these changes in order to isolate the consequences of introducing Jobseeker's Allowance.
Changes in Jobseekers' characteristics
The proportion of respondents in the post-JSA sample in full-time work almost doubled from 14 per cent to 26 per cent over the six months between interviews, while the number unemployed fell by 16 percentage points to 49 per cent. The fall in unemployment was even greater for respondents who were newly unemployed at the time of the first interview: dropping by 27 percentage points to 32 per cent.
More respondents were in paid work at the time of the second interview in the post-JSA sample than was the case before the introduction of Jobseeker's Allowance: 37 per cent compared with 31 per cent. The introduction of JSA appeared to make little difference to the destinations of those leaving unemployment, with the commonest destination being full-time paid work.
Full-time work taken up by respondents after the introduction of JSA proved to be just as stable as under the old benefits system. In each case, around three-quarters of respondents, who were working for more than 29 hours per week at the time of the first interview, were in full-time work six months later (73 per cent of the pre-JSA cohort and 76 per cent of the post-JSA cohort). A third fewer people returned to JSA following a spell of full-time work than reclaimed Income Support/Unemployment Benefit (14 per cent compared with 21 per cent) which may suggest that JSA acts as a deterrent to re-claiming.
Claiming benefit
Jobseekers' perceptions of their own understanding of the benefit rules improved after the introduction of JSA: 46 per cent felt they had a 'good understanding' of the rules compared to 37 per cent beforehand. Only four per cent of the pre-JSA cohort and 5 per cent of the post-JSA cohort felt they had no understanding of the rules.
Jobseekers following the introduction of JSA were most likely to recall the rule that they should be actively seeking work (noted by 51 per cent of respondents at the second interview). Levels of awareness surrounding the consequences of not actively seeking work increased significantly following the introduction of Jobseeker's Allowance. After the introduction of Jobseeker's Allowance, half of respondents believed that their benefit would be stopped if they did not look for work compared with two-fifths beforehand.
Reports of Jobcentres' monitoring of jobsearch increased following the introduction of Jobseeker's Allowance. Thirty five per cent said that they were questioned about this each fortnight compared with 19 per cent under the previous benefit regime. Jobseekers were also more likely to be told about job vacancies when they signed on, an increase from eight to 21 per cent.
Over one-half of people receiving JSA recalled attending a Client Adviser Interview. Fifty one per cent found it 'helpful' and 20 per cent 'very helpful'. More respondents applied for jobs as a direct result of their Client Adviser Interview than before the introduction of JSA (16 per cent compared with nine per cent).
Finding work
Less than five per cent of respondents were not looking for work and did not want a job for reasons that included long-term health problems, further study and caring responsibilities. Moreover, only eight per cent of these were claiming unemployment-related benefit (compared with 15 per cent before the introduction of Jobseeker's Allowance). Another four per cent of respondents were not currently looking for work but said they would like a job; 23 per cent of these were still claiming Jobseeker's Allowance.
There were small changes in the methods used to look for work following the introduction of Jobseeker's Allowance, with the post-JSA cohort tending to use more active jobsearch methods. The number of people using specialist journals fell by five percentage points and those looking in national newspapers by eight percentage points while more jobseekers contacted employers directly (a seven percentage point increase). The number who kept records of job applications rose by nine percentage points.
The number of respondents who said they were told of vacancies by Jobcentre staff increased from 24 per cent to 47 per cent after the introduction of JSA. Further, the number reporting Jobcentre staff directly contacting employers on their behalf rose by 10 percentage points and more respondents received advice about the kind of jobs to apply for (a nine percentage point increase).
There was some evidence, as in earlier reports, that certain methods of jobsearch were more effective than were others. Use of private recruitment agencies and learning about vacancies from Jobcentre staff were associated with a higher than average chance of being employed at the second wave interview in the post-JSA survey although these methods were not necessarily the ones used to find the job the respondents were in. There was no clear indication that being flexible about the type of job that people were prepared to accept assisted them to rapidly return to work.
Statistical modelling revealed that in areas of high employment the probability of a respondent who was recently unemployed at the time of sampling being in paid work at the second interview was higher after JSA was introduced than beforehand (Section 4.6). However, personal, socio-demographic characteristics - age, gender, education and work-experience - often had a greater impact than employment levels on the chances of being in paid work. Making use of a private recruitment agency, being prepared to accept weekend work, and looking for full-time work but being prepared to accept part-time work also appeared to have a positive effect.
The quality of return-to-work jobs
Jobseekers typically found work that did not fully exploit their skills and qualifications but this did not worsen with the introduction of JSA. Around half of jobseekers both before and after JSA took jobs in occupations that typically employed staff with lower qualifications than they possessed. Further, around a third of respondents felt their return to work job made no or 'not much' use of their skills and experience.
Approximately half of the people leaving benefit after the introduction of JSA took temporary jobs at a time when only eight per cent in the working population were in temporary employment.
The average wages received on return to work did not decline in real terms after the introduction of JSA although these did not keep up with the growth in average wages (falling behind by about 4.5 per cent. However, this relative decline in earning power seems to reflect a fall in the wages commanded by respondents before they became unemployed. There was no evidence that the wage rates received by respondents after leaving benefit were any lower than those they had received immediately before becoming unemployed.
The economic activity of partners of enemployed people
Thirty three per cent of partners in the post-JSA cohort were in paid work at the second interview and another 11 per cent were looking for work. While these figures did not change significantly after the introduction of Jobseeker's Allowance, the proportion of partners not wanting to work fell from 28 per cent to 23 per cent. Also, the number of JSA recipients who said that they would like a job even though they were not currently looking rose from 21 per cent to 29 per cent.
Respondents' partners who were employed at the time of the second interview had particular characteristics. They were more likely than other partners who were not employed at the second interview to have academic qualifications, less likely to have a child aged under five, more likely to be an owner occupier and more likely themselves to have a partner who had returned to work. Fifty two per cent of respondents who were back in work had a partner who was employed compared with 16 per cent of respondents who were still claiming benefit.
The probability of the partners of respondents being in paid employment at the time of the second interview was associated with a number of factors. These included the local employment rate and such personal characteristics as gender, age of youngest child, qualifications and the employment status of their own partner (i.e. the respondent). The probability of a partner working was not affected by the introduction of Jobseeker's Allowance.
Likewise, detailed time-series analysis found no overall change in the relationship between a male respondent's unemployment and a female partner's employment related to the introduction of JSA. However, whereas before Jobseeker's Allowance, the most significant fall in the probability that a partner would be employed occurred after the respondent had been unemployed for 12 months, this now happened earlier - after six months unemployment. This change may be a direct result of the reduction from 12 to six months in the duration of contribution-based benefit.
Leaving employment
More people took up some form of employment directly on leaving benefit after the introduction of JSA than before it (68 per cent compared with 62 per cent). Fifty three per cent moved into full-time work, 15 per cent took a part-time job.
The average duration of unemployment fell in the period after JSA was introduced. The median length of unemployment experienced by respondents who were newly unemployed when sampled declined from 14 to 12.4 weeks. After the introduction of JSA unemployed respondents were likely to leave benefit at a weekly rate of 11 per cent greater than that of people under the pre-JSA benefit regime. However, this effect was mediated by the prevailing state of the local economy. In areas of high employment JSA recipients left benefit more quickly than their counterparts under the previous regime. However, irrespective of the state of the local economy, JSA recipients, who were unemployed for six months or more, left benefit at a more rapid rate than did pre-JSA recipients. This effect mitigated any tendency for longer-term recipients to accumulate in areas of low employment after the introduction of Jobseeker's Allowance. In addition, the rise in people leaving benefit after six months further increased the rate at which recipients of JSA left benefit in areas of high employment, relative to their counterparts on Unemployment Benefit/Income Support.
The time people spent unemployed was influenced by many other factors besides JSA and the prevailing rate of employment. Those associated with comparatively long spells of unemployment included being male, limited educational qualifications, ill health, limited recent work experience, and lack of a driving licence or access to personal transport. There was no evidence that JSA materially affected this pattern of relationships.
Staying off benefit
Respondents who had left JSA were less likely to return for a further spell than were pre-JSA recipients; the likelihood of the latter group returning to benefit in any week was 26 per cent higher than for the former group. However, it is not known whether this reflected labour market developments that improved job retention or because former jobseekers were deterred from making a further claim. The longer a person stayed off benefit, the less likely they were to return. This was true under both benefit regimes. A number of personal and demographic factors combined to influence the chances of returning to benefit, and these did not change.
Conclusion
The evidence is that JSA has enhanced the proactive delivery of labour market services and reduced administrative difficulties faced by benefit recipients. Belief that benefit would be lost or reduced if a jobseeker did not comply with the rules increased following the introduction of JSA as did acceptance of the principle of conditionality which was already high before JSA was introduced. There was no evidence that detailed knowledge of the benefit system has increased since the introduction of JSA and there is considerable scope to ensure that service delivery is universally high.
It seems that JSA has fostered a fall in the duration of unemployment without a direct corresponding deterioration in the security and quality of return to work jobs. However, these improvements have been secured at a time of already falling unemployment and the impact of JSA was least evident in areas where unemployment is highest. There was also no strong evidence that the Back to Work Bonus served to counteract the tendency for partners of unemployed respondents to leave employment earlier than in the past.
Relevant publications
Bottomley D, McKay S and Walker R (1997) “Unemployment and jobseeking, ”DSS Research Report No. 62, London: TSO
McKay S, Walker R and Youngs R (1997) “Unemployment and jobseeking before Jobseeker's Allowance”, DSS Research Report No. 73, London: TSO
McKay S, Smith A, Youngs R and Walker R (1999) “Unemployment and jobseeking after the introduction of Jobseeker's Allowance”, DSS Research Report No. 99, Leeds: CDS