Welfare reform plan must tackle employers doubts

Welfare reform plan must tackle employersí doubts about the employability of long-term incapacity benefit claimants

A combination of reluctance amongst employers to recruit people who have a long-term history of claiming incapacity benefits, a slow down in jobs growth and a continuing willingness amongst employers to recruit from abroad in response to skills shortages here in the UK could all seriously diminish the effectiveness of the governmentís new plans for welfare reform, expected to be published tomorrow. These are the views of the Chartered Institute of Personnel and Developmentís (CIPDís) Chief Economist John Philpott, who today publishes ìIncapacity Benefit Reform: Why it is Needed and How to Engage Employersî. The report draws on the results of a recent CIPD survey of the attitudes of UK employers to recruiting the ëcore joblessí.

In the report, one of a series of ëWork Auditsí by Dr Philpott, he explains that the Chartered Institute of Personnel and Development (CIPD) shares the governmentís view that reform of Incapacity Benefit (IB) can help more people with disabilities into jobs and that a rights and responsibilities reform agenda is fully justified. However, on the basis of its own survey findings the CIPD stresses the importance of overcoming evident reluctance on the part of a substantial proportion of employers to consider hiring people from the IB roll.

This could seriously diminish the effectiveness of measures such as compulsory work focused interviews or Pathways to Work if these are extended beyond relatively new IB claimants to long-term claimants. As well as tackling work disincentives within the IB system, the government will therefore have to ensure that its welfare to work measures do as much as possible to engage employers and encourage more to recruit people seeking to leave IB for jobs. This is particularly important at a time when jobs growth is slowing, and employers are demonstrating their willingness to search overseas when recruiting.

1 in 3 (33%) of a representative sample of 750 employers drawn from all sectors of the economy say that they deliberately exclude people with a history of long-term sickness or incapacity when recruiting staff. Even amongst employers who do not exclude the long-term sick hardly any (only 3%) target them as part of their recruitment strategies.

And for people who have been on IB for a long time, employersí concern about whether they are fit to work is compounded by the fact that many long-term IB claimants lack up to date skills and experience and may have lost the work habit.

The survey also found:

43% of employers surveyed think long-term IB claimants would be less productive at work

60% think long-term IB claimants would be more prone to absence

26% think long-term IB claimants have potential but 32% also think they would be less adaptable, and 45% that they would be less reliable

17% question the potential teamwork ability of long-term IB claimants, 16% doubt their contribution to customer service, and 19% expect they would produce a lower standard of work.

Todayís report:

Discusses various competing explanations for the high level of IB claims

Examines the governmentís approach to reforming IB

Considers how best to boost recruitment of people seeking to move off IB

Assesses the cost implications and timescale of effective IB reform

Dr Philpott comments:

ìThe success of work focused interviews and the Pathways to Work pilots already demonstrates what active welfare to work measures targeted at IB claimants can potentially achieve. However, there is a missing, or at least understated, element in the governmentís approach ñ the employer dimension.

ìThe CIPD survey shows a marked wariness on the part of many employers when it comes to hiring people with a history of health problems, especially those who have been jobless and on IB for long periods of time. Such low expectations may or may not be unfair. But either way they pose an obvious problem for the government as it attempts to make a big reduction in the IB count. These factors are compounded by the timing of these reforms, which look set to coincide with a slowing of the labour market, and also come at a time when employers are increasingly willing to look overseas in their efforts to recruit new staff.î

Dr Philpott continues:

ìThe good news for ministers is that many employers support the governmentís welfare to work agenda. 40 per cent of employers surveyed would consider making some kind of flexible working arrangement available to recruits from the IB count while a third would provide access to on the job training to such recruits. Over a quarter of employers surveyed would also run a coaching or mentoring scheme and would welcome the involvement of external employment advisers or mentors, including those from voluntary bodies with particular experience of people with anxiety or depressive disorders.

ìEven so, overcoming employer resistance to hiring long-term IB claimants may require greater use of direct financial incentives to employers, such as the offer of recruitment subsidies or low cost work trials for claimants. This, however, could increase the budget needed to win the so-called ëwar on worklessnessí and thus reduce any net savings to the Treasury from a cut in the IB count.î