Prospects of part-time work: the impact of the Back to Work Bonus
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. 115
By Karl Ashworth and Rachel Youngs
The Back to Work Bonus (the Bonus) was introduced in 1996 with the aim of encouraging clients in receipt of Jobseeker's Allowance (JSA) or Income Support (IS) to maintain contact with the Labour Market. This quantitative study explores whether the Bonus has influenced the behaviour of jobseekers and lone parents on IS working part-time. It also assesses the impact of part-time work in helping jobseekers move off benefit and into full-time work (the 'stepping-stone' effect). The report is based on analysis of administrative data and the JSA Claimant Survey both before and after the introduction of the Bonus.
The main findings from this research are:
- A small but significant increase in the level of part-time work declared by jobseekers was observed between 1996 and 1998, from 3.3 to 4.4 per cent. This increase takes into account labour market change.
- The increase was most significant for jobseekers with unemployment durations of one to two years, those aged 55 or over, and those in couples.
- Levels of part-time work among partners of jobseekers, and lone parents on Income Support remained unaltered between 1996 and 1998.
- The proportion of jobseekers in part-time work meeting the Back to Work Bonus eligibility conditions increased from 84.5% in 1996 to 88.4% in 1998.
- Awareness among jobseekers that part-time work whilst claiming was a legitimate option increased from 68% to 74% between 1996 and 1998, although an increase in awareness was not matched by an increase in levels of part-time work by all groups of jobseekers.
- Experience of part-time work whilst signing appears to have been influential in moving jobseekers off JSA and into work, but not necessarily full-time work.
- Jobseekers with part-time work experience were more likely than those without such experience to have taken non-permanent work. However, the majority of all jobseekers wanted a permanent position. This suggests that temporary work may be used as a stepping stone into more permanent employment.
Background
The Back to Work Bonus was introduced in October 1996 accompanying the introduction of Jobseeker's Allowance which replaced Unemployment Benefit and Income Support for unemployed jobseekers. The Bonus is a monetary award that is payable to jobseekers as well as lone parent and disabled recipients of Income Support who move off benefit and into work. The Bonus is accrued through earnings from part-time work that a recipient undertakes whilst signing; where a half of any earnings over the disregard threshold are accumulated into the Bonus scheme (to a maximum of £1,000). For part-time earnings to be counted in the scheme, a benefit recipient must satisfy two conditions: first they must have been on benefit for 91 days or more. Secondly, their earnings from part-time work exceed their earnings disregard.
The Bonus is intended to encourage claimants and their partners to keep in touch with the labour market by undertaking or increasing small amounts of work while claiming benefit. Furthermore, the Bonus aims to provide an incentive to claimants and their partners to move into work which takes them off benefit.
In order to assess whether or not any evidence exists to suggest that the Bonus has achieved its objectives, the proportions working part-time, and those meeting the eligibility conditions of the Bonus, were compared before and after the Bonus was introduced.
Level of part-time work among claimants
The extent of part-time work undertaken in 1998 by unemployed jobseekers was relatively low at 4.4 per cent overall (Section 2.3.1), but was highest for single women (8.4 per cent), older recipients (eight per cent) and recipients unemployed between one and two years (6.3 per cent). However, despite this low base the proportion in part-time work had increased by one percentage point from 3.3 per cent of recipients in 1996 (Section 2.3.2). This increase was most striking for couples (from 4.4 to 6.3 per cent), people aged 55 or over (from five to eight per cent) and recipients unemployed between one and two years (from 3.3 to 6.3 per cent).
The increase in part-time work for recipients in a couple was likely, in part, to have been related to the changes in the rules on part-time work for couples. In 1998, they had a joint earnings disregard of £10.00 a week, rather than the individual £5.00 a week disregard that existed in Income Support before the introduction of Jobseeker's Allowance. However, whilst another change allowed partners to work a maximum of 24 hours a week, up from 16 hours a week, partners had not increased their levels of part-time work (Section 2.4).
The majority of jobseekers in part-time work earned over their disregard under both regimes (Section 2.3.3). Furthermore, excluding people unemployed for less than three months, the proportion in work meeting the Back to Work Bonus eligibility condition of earning over their disregard increased following the introduction of the Back to Work Bonus.
Lone parents appeared to be unaffected by the introduction of the Bonus (Chapter 3). In fact, not only were part-time work levels stable at the two time points, the proportion earning over the disregard decreased between 1996 and 1998. However, lone parents registered for Jobseeker's Allowance were far more likely to work part-time in 1998 than were their counterparts on Income Support.
The most likely explanation for the general increases seen in part-time working was an increased awareness that it was a legitimate option under the benefit rules (Section 4.2). Recipients who showed disproportionate increases in this awareness were couples, older recipients and those who had been unemployed for less than three months: mainly those who had shown increased levels of part-time work. Advice given by Employment Service advisers appeared to be a primary reason for increased awareness, particularly for couples (Section 4.2.2).
The effect of part-time work as a stepping stone off benefit
Belief in the feasibility that part-time working whilst signing was an aid to moving off benefit and into work (the so-called stepping-stone effect) was relatively high before the introduction of the Bonus, and this belief increased slightly, but significantly, in 1998 (Section 4.3). Recipients in couples with children were most likely to show an increased belief in the stepping-stone effect, and recipients with an unemployment duration of between one and two years. This, might, in part, help to explain the increases in the levels in part-time work for these groups. However, older recipients, who were amongst those showing larger increases in part-time working, remained sceptical about the efficacy of part-time work and the stepping-stone effect, as did longer-term unemployed people.
There was a relatively high awareness of the existence of the Bonus, though it was not possible to ascertain if people knew what it was for (Section 4.4). However, other research suggests low awareness of the purpose of the Bonus. Most knowledgeable about the Bonus were people who had part-time work experience whilst signing and recipients in couples with children.
The underlying rationale - that part-time work whilst signing helps people move off benefit and into work - was supported empirically. People who had concurrently worked and signed were slightly less likely to be on benefit at their follow-up interview - some eight months or so after being selected into the study (Section 5.2). The majority of people who worked part-time whilst signing and who then moved into work and off benefit did so on a full-time basis (over 30 hours a week). However, they were less likely to do so than those who had not concurrently worked and signed. Disproportionately more jobseekers, who had worked and signed, left benefit for work of less than 16 hours a week. They were also more likely to take jobs with non-permanent contracts (Section 5.3). Approximately one fifth did so because they wanted such a job, hardly any of those who did not work part-time whilst signing wanted a non-permanent job. Taking on non-permanent jobs was a strategy employed both by those who had and had not concurrently worked and signed in order to help them into a more desirable job.
Conclusions
The study concludes (Chapter 6) that there is little evidence supporting the hypothesis that the Bonus has encouraged benefit recipients into part-time work, though jobseekers did show increases in part-time work levels after the introduction of the Bonus. Rather, it would appear to be caused by increases in the awareness that part-time work is a legitimate option under the benefit rules, and in addition, there are slightly more jobseekers who believe in the stepping stone effect.
Part-time work does appear to help some people move off benefit but the majority of these take-on non-permanent positions. However, many of those not working part-time also move into non-permanent work. Insecure employment is undertaken by large numbers of people returning to work and often these jobs themselves are viewed as a means into more secure work, i.e. people may use a number of stepping-stones to secure work. The issue of sustainable employment is one that requires addressing, and the question that needs addressing next is whether or not part-time work can help people move more easily or quickly into such work.
Relevant publications
R. Thomas, N. Pettigrew, D. Cotton and P. Tovey, (1999) “Keeping in Touch with the Labour Market: a qualitative evaluation of the Back to Work Bonus” (Department of Social Security Research Report No.96), Leeds: CDS
G Elam, A Thomas (1997) “Stepping Stones to Employment ”(Department of Social Security Research Report No.71), London: TSO
A Smith, K Ashworth, R Walker (1998) “Prospects of Part-Time Work: Preparing to Evaluate the Back To Work Bonus ”(Department of Social Security In-House Report No.45).
A Garman, G Redmond, S Lonsdale (1992) “Incomes In and Out Of Work ”(Department of Social Security Research Report No.7), London: HMSO
A Marsh, R Ford, L Finlayson (1997) “Lone Parents, Work and Benefits ”(Department of Social Security Research Report No.61), London: TSO
R Sainsbury, S Hutton, J Ditch (1996) “Changing Lives and the Role of Income Support ”(Department of Social Security Research Report No.45), London: HMSO
A Shaw, R Walker, K Ashworth, S Jenkins, S Middleton (1996) “Moving Off Income Support” (Department of Social Security Research Report No.53), London: HMSO
D Bottomley, S McKay, R Walker (1997) “Unemployment and Jobseeking” (Department of Social Security Research Report No.62), London: HMSO
S McKay, R Walker, R Youngs (1997) “Unemployment and Jobseeking before Jobseeker's Allowance” (Department of Social Security Research Report No.73), London: TSO
L Finlayson, A Marsh (1998) “Lone Parents on the Margins of Work” (Department of Social Security Research Report No.80), Leeds: CDS
H Trickey, K Kellard, R Walker, K Ashworth, A Smith (1998) “Unemployment and Jobseeking Two Years On ”(Department of Social Security Research Report No.87), Leeds: CDS
A Marsh, C Callender, L Finlayson, R Ford, A Green, M White (1999) “Low Paid Work in Great Britain” (Department of Social Security Research Report No.95), Leeds: CDS