By Aaron Barbour
photo credit: Carl Blake
Getting a job is difficult enough but when a system, supposedly designed to support you, actively works against you producing a disincentive to finding work - then you’re in trouble.
More than three years ago we looked at one mechanism within the benefits system designed, we thought, to encourage people off benefits and into work. The ‘earnings disregard’, allows people to earn small amounts of money without losing benefits, as an incentive to try out bits of work before moving into sustainable employment. The amount has remained virtually unchanged for the last 20 years (since 1988) and is pitifully low. This impacts greatly on individuals as it prohibits a move off benefits into work. It hinders organisations trying to employ staff for part-time, sessional, or temporary employment as people do not want to give up their benefits for short term work, knowing what it’s like to get back into the system. This is the benefits trap.
The consequence is that people remain trapped in poverty, reliant on welfare benefits and unable to contribute to the development of their community and society.
It is interesting to note that three years on many of the issues and problems remain the same. The government must address the perverse situation which exists with work incentives, particularly earnings disregards. Current rules actively disincentivise people from returning to work. Shortly after this paper was written in October 2005 the national minimum wage rose to over £5.00 an hour. This means that single people on Jobseekers Allowance were not able to work even one hour a week without impact on their benefits!
Today we publish LinksUK Evidence Paper no.12 (PDF download), as we know the government Department for Work and Pensions is interested in examining ‘work incentives’ at the moment. It was a working paper written in 2005, on behalf of an informal network of 45+ interested organisations seeking to reform the earnings disregards rules and thresholds.
Have you found similar ‘traps’ within the benefit system? Share your experiences with us by leaving a comment.
[...] One of the main findings was that “hardship is an important factor motivating people to commit fraud. The DWP could consider raising the limits on what can be earned without deductions from means-tested benefits.” In other words this means increasing the levels of Permitted Work Earnings Disregards. [...]