Unemployment and jobseeking before 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. 73
By Stephen McKay, Robert Walker and Rachel Youngs
In October 1996 Jobseeker's Allowance replaced Unemployment Benefit and Income Support for unemployed claimants. This research will contribute to the baseline against which the new system will be evaluated. This report describes the findings from two waves of interviews, held six months apart, with a sample of 5000 people who were claiming unemployment related benefits before the introduction of Jobseeker's Allowance. The research was commissioned by the Department for Education and Employment, the Department of Social Security, the Employment Service and the Benefits Agency and was carried out by the Centre for Research in Social Policy at Loughborough University.
- Most spells of unemployment were short. Nearly a third of newly unemployed claimants left benefit within six weeks and half within 14 weeks. However, a third of claimants who left benefit returned within thirty weeks.
- There was little evidence of growing detachment from the labour market between the two surveys. The level of jobseeking was generally maintained despite the fact that the success rate of applications fell. Thirty per cent of jobs were found through friends and relatives and this was the most effective method of job-search.
- Unemployed claimants generally understood the principle that they should look for and be available for work but most were unclear about the detail of their responsibilities, benefits and the sanctions regime.
- The chances of a person finding work quickly were determined largely by their characteristics and work history: age, sex, qualifications - particularly academic ones - recent work experience and the initial cause of unemployment.
- Employment Service interventions had some effect on the return to work. In particular, advisory interviews and active signing helped to speed it up.
- The disincentive effect of the benefit system on the employment of partners was found to be less than was previously thought.
Introduction
In October 1996 Jobseeker's Allowance (JSA) replaced Unemployment Benefit and Income Support for unemployed claimants. The policy aims to improve the working of the labour market, secure better value for money and enhance the service to people seeking work. The Department for Education and Employment, the Department of Social Security, the Employment Service and Benefits Agency jointly commissioned a series of 'before' and 'after' studies as part of the evaluation of JSA. The centrepiece of the research, carried out by the Centre for Research in Social Policy at Loughborough University, is a series of surveys in which the experience of two separate samples (or cohorts) of unemployed people are compared under the old and new benefit regimes.
This report describes the experiences of people who were claiming benefit before the introduction of Jobseeker's Allowance and so will contribute to a baseline against which the effectiveness of the new system can eventually be evaluated. It is based on two interviews, conducted some six months apart, with a nationally representative sample of 5,000 people who were unemployed and receiving benefit in Autumn 1995.
Flows out of unemployment
Most spells of unemployment are comparatively short and a correspondingly small proportion of people suffer long-term unemployment. Thirty two per cent of new claimants left unemployment-related benefits within six weeks of becoming unemployed and half within 14 weeks. Because people who do not return to work quickly build up in the stock of unemployed people, the average (median) spell of unemployment for the stock sample was noticeably longer, 36 rather than 14 weeks. Some claimants leave benefits only to return again within weeks: as many as one in three of the sample who stopped signing on were back on benefit before thirty weeks had passed. The likelihood was initially high (10 per cent were reclaiming within a month and 17 per cent within six weeks), but fell quickly.
Almost two-thirds of respondents who left unemployment did so for paid work and, of these, nearly four out of five found full time employment. Around half of the jobs, though, were fixed term or temporary. Weekly earnings were £146 for men and £110 for women, considerably less than the average earnings of manual workers (£301 and £195 respectively). A significant minority supplemented their wages with Family Credit (two-fifths of those with children and in full-time work and one-fifth of those taking a part-time job) or Housing Benefit (received by about one in eight respondents who were working). Of the 17 per cent of claimants who took part time jobs (57 per cent of them women) almost a third had switched to full-time work within six months.
Rules, responsibilities and interventions
A key objective of introducing Jobseeker's Allowance was to improve awareness of the conditionality of receipt of unemployment-related benefits. The research found that before its introduction, claimants had only a hazy recollection of the rules. This does not mean that claimants were totally unaware of the conditions of benefit receipt. The vast majority, for example, were diligently looking for work. However, it appears that the individual rules had limited salience and were seen as part of the process of 'signing on'.
The majority of people were aware that infringement of the rules could lead to sanctions but, again, few understood the details. Over a third thought that nothing would happen to them if they stopped looking for work. Nevertheless, eight per cent of respondents said that they had changed their behaviour in the previous six months through fear of losing benefit and four per cent of respondents who were signing on at the second interview reported being sanctioned in some way.
The effect of Employment Service interventions
The Jobseeker's Agreement was introduced as a condition of eligibility under the change to Jobseeker's Allowance. The Agreement is modelled on the voluntary Back-to-Work Plan which existed under the previous system but is more specific and mandatory. The survey revealed that two-thirds of respondents remembered their Back-to-Work Plan and that over eight out of ten of these followed it, at least in part. Few, though, did so with much conviction and, indeed, there was no evidence that following a Back-to-Work Plan speeded a person's return to work.
Active signing had more effect. The signing on interview (now known as fortnightly attendance) is used by staff as an opportunity to monitor and assist with job-search and is an important component of Jobseeker's Allowance. Forty per cent of claimants whose last visit to sign on had included elements of active signing said that they took action as a direct result, almost a third applying for a specific job. Moreover, statistical modelling indicates that active signing increased the flow of people off benefit, although there was no evidence from the two interviews held that it conferred a sustained labour market advantage: the same proportion of respondents were employed at the time of the second wave interview irrespective of what had happened when last they signed on.
Modelling also detected an increase in the numbers of people leaving benefit just after they would have been due for a 13 week review or a Restart interview. This is despite the fact that around half of the respondents affected said they did not find the review helpful and/or took no action as a result. Again there is no evidence, at this stage in the research programme, of a long-term impact on employment prospects.
Finding work
The vast majority of claimants were steadfastly committed to finding work and actively seeking it. In aggregate, job-search at the time of the second interview remained at the same high level as it had been six months earlier, and there was no evidence of widespread discouragement or of people welcoming a life on benefit.
On average respondents spent four and a half hours per week looking for work. Only one per cent of those signing on for work at the time of the second interview admitted that they did not want to work, although an additional three per cent were not looking for jobs - a quarter on health grounds.
Taken in aggregate there is no suggestion that people become increasingly inflexible the longer that they are without work. There were however exceptions. They included the young, especially those living with parents or other single people, claimants with a mixture of vocational and academic qualifications, those who had never before been unemployed and those with a history of unemployment.
The research suggests that people either alternated the methods of finding work which they used, or were prone to change their strategy over time. They also relied increasingly on friends and relatives as sources of information. The level of activity, though, was generally sustained. On the other hand, the success rate of applications fell over time: the proportion resulting in interviews dropped from 31 per cent to 23 per cent while those producing job offers declined from 16 per cent to nine per cent.
Effective job-search activities
The probability of a person finding work seemed to be related to the method used rather than to the time spent looking. Moreover, different methods seemed to be variously effective for different groups of respondents. There was little point in people without qualifications scouring national newspapers but direct approaches to employers and registering with a recruitment agency proved profitable for this group. Nevertheless it was members of the professions and managers who benefited most from direct contact with employers as they did from speaking to friends; the latter strategy proved to be of little value to people without qualifications. Jobclubs seemed to achieve most for claimants with few, if any, skills, while non-manual workers seemed to gain more than most from the advice of Jobcentre staff.
Thirty per cent of jobs were found through friends and relatives. Another 14 per cent were secured by contacting employers, or by employers approaching claimants; a similar number were found through advertisements in local newspapers and 12 per cent from displays in Jobcentres. Advice from Employment Service staff emerged, after friends, as the most effective strategy (2.4 times 'better' than average).
Respondents who were more prepared to take a flexible approach, both to the kind of job that they wanted and to the level of wage that they would accept, placed themselves at a slight competitive advantage. Only 18 per cent of people who took part-time work had initially intended to do so, and 43 per cent of those taking part-time work had specifically been seeking a full-time position. Similarly, 44 per cent of those who had begun work were employed for less than their stated reservation wage; disproportionate numbers were claimants with children of whom 45 per cent were receiving Family Credit in their new job.
But flexibility did not always bring the expected rewards. A willingness to take part-time work appeared, at first sight, to be associated with a greater chance of finding a job. However, once account had been taken of the other characteristics of the claimants, notably sex and qualifications, the preparedness to take part-time work actually counted against the job-seeker: it may sometimes have been an act of desperation rather than a successful strategy. On the other hand, a preparedness to take any job emerged as a significant factor in helping someone find work once gender, skills and experience had been discounted.
The employment of partners of the unemployed
Employment among partners of unemployed respondents was around 31 per cent below the corresponding rate for the partners of people in work. However, little of the overall shortfall was directly attributed to 'perverse incentives' created by the benefits system.
The majority of people (73 per cent at least) who were working when their partner became unemployed continued to do so. However, in line with expectations, some partners did stop work. This was most noticeable in situations where the partner was female and/or had no formal qualifications and where the couple was dependent on a means-tested, unemployment-related benefit. The resultant fall in the proportion of partners working generally seemed to be short-lived once claimants were back at work. Perhaps most unexpectedly, almost as many people began working following the unemployment of their partner as ceased to do so.
Statistical modelling, undertaken by Peter Elias of the Institute for Employment research, suggests that only about 11 per cent of the shortfall in the employment of the partners of claimants was due to the unemployment of their claimant partner. About half of this effect may have been attributable to the ending of entitlement to Unemployment Benefit after 12 months of unemployment.
Leaving unemployment
While being prepared to settle for a lower wage and pursuing one method of job-search rather than another may speed some people's return to work, the chances of a person leaving unemployment rapidly are often determined long before they become unemployed.
The possession of qualifications, particularly academic ones, more than halved the median duration of unemployment, although the absence of qualifications seemed less of an impediment to women than it was to men. On the other hand, claimants aged over 45 or with children, especially young ones, a health problem or who were tenants rather than owner occupiers, were likely to remain on benefit for longer than average. The same was true of people who either worked part-time or engaged in study while claiming as unemployed.
The initial cause of unemployment emerged as one of the main predictors of more lengthy spells on benefit. People who began claiming straight after leaving full-time education experienced the shortest periods of unemployment, though an above average (if still small) proportion then returned to full-time study. Likewise, those moving onto benefit after a spell of temporary work tended to leave benefit two to three times more quickly than claimants who had been dismissed or made redundant.
Worries about returning to work
Recent policy changes have sought to reduce uncertainty about income levels for people leaving benefit: the introduction of Housing Benefit Extended Payments and fast-tracking of Family Credit applications serve as examples. Claimants who mentioned concerns about income levels, frequently in relation to housing costs and the Council Tax, tended to remain on benefit for longer than other claimants, although other worries - such as repaying debts and managing until the first pay day - had much less effect. However in practice most people who succeeded in returning to work did not experience problems of this kind, although between one in seven and one in eight of those who returned to work reported difficulties arising from the loss or reduction of Housing Benefit, Council Tax Benefits or passport benefits and one in five encountered problems bridging the time to the first pay cheque.
Conclusions
From the perspective of evaluating the effects of Jobseeker's Allowance, the key points to emerge are that the vast majority of unemployed claimants were already diligently seeking work, most were reasonably flexible in the work that they would take and that many followed the instructions given to them by the Employment Service, albeit often with little enthusiasm. In addition, some methods of job-search appeared, in certain circumstances, to be better than others and it was possible to detect an effect of one or two Employment Service procedures, notably active signing and the 13 week review, on the chances of finding work.
Relevant publications
An earlier report in the DSS research series presents findings from the first interview carried out with the pre-JSA claimant sample:
Bottomley, D., McKay, S. and Walker, R. (1997) “Unemployment and Jobseeking: A National Survey in 1995 ”(Department of Social Security Research Report No. 62). London: HMSO.
A series of qualitative studies were commissioned to complement the claimant survey. Those listed below describe the benefits regime before JSA; post-JSA qualitative research has been commissioned or is planned.
Cragg, Ross and Dawson (1997) “Employment Service Claimants and the Benefit System”. London: Cragg, Ross and Dawson.
Croft, J. (1997) “Studying Whilst Unemployed ”(DfEE Research Studies No. 43). London: TSO
Elam, G., and Thomas, A. (1997) “Stepping Stones to Employment: Part-time Work and Voluntary Activities Whilst Claiming Out-of-Work Social Security Benefits ”(DSS Research Report No. 71). London: TSO.
Kellard, K., and Stafford, B. (1997)“ Delivering Benefits to Unemployed People ”(DSS Research Report No. 69). London: TSO.
MORI, (1997) “The Effect of Jobseeker's Allowance on 16 and 17 Year Olds: Baseline Survey, ”London: MORI.
Stafford, B., Dobson, B. and Vincent, J. (forthcoming) “Delivering Benefits to Unemployed 16 to 17 year olds ”(DSS Research Report No. 70). London: TSO.
Vincent, J., and Dobson, B. (1997) “Jobseeker's Allowance Evaluation: Qualitative Research on Disallowed and Disqualified Claimants ”(DfEE Research Report No. 15). London: DfEE.
Other publications of research commissioned as part of the evaluation of JSA are:
Atkinson, J., and Pollard, E. (1997) “Jobsearch: A Review of the UK Literature Prior to the Jobseeker's Allowance. ”Brighton: The Institute for Employment Studies.
Elias, P. (1997) “The Effect of Unemployment Benefits on the Labour Force Participation of Partners,” Warwick: Institute for Employment Research, Warwick University.