Success of Welfare Reform Bill depends on overcoming employer reluctance to hire

Todayís publication of the governmentís long awaited Welfare Reform Bill represents a major step forward in reducing the waste of human potential, and the huge cost to the taxpayer, caused by an unnecessarily high level of Incapacity Benefit (IB) claims. But the measures designed to improve work incentives and provide support for claimants who have the potential to work will need to overcome concern on the part of a significant number of employers about the potential employability of people with a track record of poor health, says CIPDís Chief Economist John Philpott.

Dr Philpott continues:

ìA CIPD survey of more than 1000 employers conducted this spring finds that almost 1 in 5 (18%) do not consider job applications from people on IB for reasons of mental ill health. 1 in 10 employers do not consider applications from people on IB for reasons of physical ill health. For all IB claimants, effective exclusion from the recruitment process is relatively high in the private sector (manufacturing and services) and amongst small and medium sized employers.î

The data comes from the most recent CIPD/KPMG quarterly Labour Market Outlook survey, which shows that employer concern centres mainly on two factors: the possibility that recruits from the IB roll might suffer continuing problems with ill health and the common observation that many IB claimants lack skills or basic employability.

To address these concerns, two-thirds of employers surveyed by the CIPD would like the government to provide grants for the assessment and improvement of claimantsí employability. Such provision would be particularly popular amongst smaller employers (those with fewer than 50 staff) most of whom who would also welcome tax breaks or subsidies to encourage hiring of the long-term sick.

Significantly, approaching half (45 per cent) of employers want more practical evidence of how policy measures such as Pathways to Work can help claimants make a lasting and effective return to work. This will be a key challenge to the governmentís new army of personal job advisers as well as those employers and other experts drafted in to promote the welfare reform measures.

Philpott continues, ìThe Welfare Reform Bill contains exactly the sort of rights and responsibilities approach to reducing the IB count that Britain needs. Especially welcome is the greater ministerial focus on the barriers to work faced by the growing proportion of claimants suffering mental ill health conditions like depression and anxiety. But the key to success lies in getting employers large and small on board ñ without this even the best welfare reform might not end up with more people in work.î