Unemployment and jobseeking after the introduction of 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. 99
By Stephen McKay, Alison Smith, Rachel Youngs and Robert Walker
Jobseeker’s Allowance (JSA) was introduced in October 1996 and replaced Unemployment Benefit (UB) and Income Support (IS) as the benefit for unemployed people. In order to evaluate the new benefit, a series of ‘before’ and ‘after’ studies were conducted to establish changes that could be attributed to the introduction of JSA. This report is the third in a series of four based on findings from the JSA claimant surveys and the first to use the post-JSA findings. The report examines issues such as the characteristics of unemployed people and their partners; clients’ understanding of rules, their experience of the Employment Service, jobsearch strategies, activities whilst claiming and routes off benefit. The report compares the findings with those from the pre-JSA claimant survey.
Key findings include:
- The proportion of jobseekers leaving benefit at any one time had increased following the introduction of JSA, although destinations remained the same. As was the case prior to JSA, the duration of a jobseeker’s unemployment appeared to influence the economic status of his/her partner, with economic activity rates lower amongst partners of longer-term unemployed people.
- Under JSA jobseekers showed greater awareness of, and agreement with, the conditionality attached to benefit receipt. ‘Active signing’ procedures in the fortnightly jobsearch review had increased significantly.
- Jobseekers were spending slightly longer looking for work following the introduction of JSA. Many respondents experienced difficulties with their jobsearch, with two-fifths mentioning financial barriers, such as travel costs; and a quarter mentioning non-financial barriers, such as poor health.
- Around one in ten respondents were undertaking part-time work whilst claiming. A similar number were undertaking voluntary work and/or a course of study whilst claiming. Since the introduction of JSA, more jobseekers were aware that undertaking part-time work whilst claiming was permitted.
- The median wages earned by men leaving unemployment fell between the 1995 survey and the 1997 survey whilst median wages for women increased or remained fairly level in real terms. Nevertheless, in general those leaving benefit under the JSA regime encountered fewer problems than did those leaving benefit under UB/IS. Once respondents had left unemployment, in the majority of cases they felt that their financial circumstances improved.
- Knowledge of work incentive measures was not universal.
Unemployment and jobseeking after the introduction of JSA
JSA was introduced in October 1996, and marked an important shift in the emphasis of benefits for unemployed people. This report analyses interviews conducted in autumn 1997, about one year after the introduction of JSA, and comparisons are made with a separate (baseline) sample interviewed two years previously.
A total of 4777 respondents were interviewed as part of the post-JSA sample, including a large sample of new benefit recipients (those signing on for less than two weeks at the time of sampling).
Unemployed people: characteristics under JSA
Overall, the personal and family characteristics of people in the pre and post-JSA samples were very similar.There were two notable differences. First, there was a five per cent increase in the numbers living with their parents in the post-JSA sample. The corollary was a slight increase in the proportion of single respondents. The other difference between the cohorts was an increase of seven percentage points in those whose claiming duration was between six and 12 months, with a drop of six per cent in the numbers claiming for between one and two years.
Partners of JSA clients
One third of all respondents in the post-JSA survey had a partner. Respondents with a partner were more likely to be male and aged over 35. Eighty six per cent of interviewed partners were female and 63 per cent had children aged under 16.
Fifty four per cent of partners gave their main activity as care of the home and family. Seventeen per cent were in full-time work, 14 per cent were working part-time and eight per cent were unemployed and looking for work.
Based on when the respondent was claiming benefit, 29 per cent of partners were in paid work, 12 per cent were not working but were looking for a job and 24 per cent were not working or looking but said they would like to work. Six per cent were not sure whether they would like a job and 29 per cent said they definitely did not want to work. Partners without children were most likely to be working (42 per cent) and only 19 per cent did not want to work. Partners with pre-school aged children were least likely to be working (14 per cent) but 31 per cent said they would like to work.
Partners were more likely to be working when the respondent was no longer claiming benefit as unemployed. Partners of respondents unemployed for less than six months were also more likely to be working (41 per cent compared to 16 per cent of partners of respondents unemployed for more than six months). However, few partners (four per cent) said they had changed their working hours because of the respondent’s unemployment. Partners were more likely to work when local unemployment rates were higher.
The most common reasons for not working were family commitments (69 per cent), long term sickness (20 per cent) and concerns that the respondent’s benefit would be reduced or stopped (14 per cent).
Understanding of rules and obligations among jobseekers
There were few differences between the pre and post-JSA surveys in benefit recipients’ spontaneous recall of rules and obligations. Based on open-ended questions, levels of respondents’ knowledge seemed to be quite low. The most common answers regarding rules about claiming benefit related to actively seeking work (33 per cent) and needing to sign off benefit when getting a job (29 per cent). One-fifth of respondents were unable to state a rule.
Prompted questions showed higher levels of awareness. When asked, 93 per cent of respondents remembered signing a Jobseeker’s Agreement, but very few mentioned their Jobseeker’s Agreement in the context of the conditions of benefit receipt. Most said they had followed their Jobseeker’s Agreement at least to some extent (93 per cent) but less than half of those following the agreement said they found it useful (42 per cent). The most common response of those who did not find their Jobseeker’s Agreement useful was that it had no practical value (41 per cent).
Most respondents knew their benefit could be stopped or reduced (87 per cent) but far fewer were able to state reasons why. For someone receiving benefit as unemployed whilst not really looking for work, more than half (51 per cent) thought ‘Their benefit will be stopped’ (compared to 40 per cent in the pre JSA survey). Only ten per cent said ‘Nothing will happen, as no one really checks…’ (compared to 13 per cent in the pre-JSA survey).
There seems to have been no increase in the proportion of jobseekers who saw their benefit reduced or stopped at the beginning of their most recent claim. For those who had experienced this (16 per cent), many gave other reasons than sanction or disallowance.
Most unemployed people agreed, at least in principle, with the basic idea of conditionality underlying JSA and this view seems to have strengthened since the introduction of JSA. Ninety six per cent of respondents believed it was their responsibility to look for a job. Seventy eight per cent agreed that getting benefit should depend on proving you are doing all you can to get a job, compared to 73 per cent in the pre-JSA survey. Just 11 per cent said they would not look for work if their benefit did not depend on it.
Contact with the employement service
JSA aims to make dealings between unemployed benefit recipients and the Employment Service and Benefits Agency more straightforward. Jobseekers are now only required to contact the Employment Service in order to have their claim processed.
Three-quarters of newly unemployed people contacted the Employment Service on no more than two occasions for their claim to be processed. Although this did not alter between the cohorts, there was a significant decrease in the numbers making one contact and an increase in the numbers making two. Repeat claimants were more likely to make just one contact, suggesting a familiarity with the system.
Eighty three per cent of respondents who made a new claim within the 12 weeks prior to the survey were able to recall their New Jobseeker Interview, an increase of eight per cent on pre-JSA. Most respondents had a clear understanding of what was expected of them following the interview and there was a clear increase in the numbers between cohorts taking action as a direct result.
At the Fortnightly Jobsearch Review the Employment Service continues and develops the active elements of fortnightly intervention introduced prior to JSA. During their fortnightly interview two-thirds of jobseekers were asked about their jobsearch compared to 35 per cent under the old system. All aspects of active signing were found to have increased since the introduction of JSA. However, the extent to which a Jobcentre adopted active signing depended heavily on the area in which it was located. The majority of jobseekers believed the fortnightly interview to be a checking mechanism although there was a decline in the numbers who felt that it was simply a means of getting benefit.
Fifty six per cent of respondents unemployed for more than 12 weeks remembered attending a Client Adviser Interview, 14 per cent fewer than the pre-JSA cohort. However, there was an increase in the proportions who recalled their interview to be of use between cohorts (from 48 per cent to 57 per cent). Despite this, almost half of those who remembered attending a Client Adviser Interview said they did not take any action as a direct result.
The proportions who recalled being directed by an adviser fell between cohorts, a possible reflection of the increased prominence of the rules relating to JSA.
Looking for work
Ninety five per cent of respondents were looking for work, the majority taking active steps to return to the labour market. One of the commonest methods of looking for work was through the vacancy column in the local newspaper (89 per cent used this method). In addition, three-quarters looked at the vacancy boards in their local Jobcentre, and one-quarter asked friends or relatives if they knew of any openings. In general, the methods used by respondents in their search for work did not alter following the introduction of JSA. However, there was a ten per cent increase, to 41 per cent, in the numbers directly contacting employers.
Overall, respondents were spending slightly longer looking for work each week post-JSA (from 6.5 hours to 7.1 hours). Almost half of the respondents felt the time they were able to spend looking for work was limited for some reason. Travel costs were a barrier mentioned by one third of respondents.
There was an increase in the number of applications made in the four weeks prior to interview following the introduction of JSA, reflecting the increased time spent looking for work. Eighty four per cent of respondents had applied for at least one job in the four weeks prior to the 1997 interview. Thirty eight per cent of respondents attended an interview. Fifty one per cent of these interviews resulted in an offer of a job.
Before the introduction of JSA, clients demonstrated quite high levels of flexibility in the jobsearch, and following the introduction of JSA, there was little change. The majority looked for full-time employment exclusively. However, they remained flexible in the type of full-time employment they would accept, with seven in ten prepared to do shift work or work at weekends and six in ten prepared to work nights.
Respondents continued to have a number of concerns over returning to paid work, including the costs of starting a new job (such as travel expenses), wage levels and the loss of some benefits. These concerns did not vary under the different benefit regimes.
Part-time jobs, voluntary work and study
Both before and after the introduction of JSA, 13 per cent had worked part-time whilst claiming benefit. This was more common among women than men, and was more likely the longer that someone had remained unemployed. It did not seem to be associated with a faster rate of movement off benefit. After the introduction of JSA, there was an increase in the proportion of jobseekers who were aware that undertaking part-time work whilst claiming was permitted, from 25 per cent to 32 per cent.
Under one-tenth (nine per cent) of respondents were engaged in voluntary work, compared with eight per cent pre-JSA. More than half (56 per cent) began voluntary work before their current spell of unemployment. A slightly higher proportion of those who carried out voluntary work had left benefit by the time of the first interview compared to the sample as a whole (33 per cent compared to 29 per cent).
Thirteen per cent of respondents were studying whilst on benefit, and an additional ten per cent had done so at some point in their current spell of unemployment. Some types of course appeared to increase the chances of leaving benefit, but chances were lower among some groups who had studied in the past.
Routes off benefit
Among most groups of the sample (defined by their personal characteristics) the proportion leaving benefit had increased after the introduction of JSA. A total of 29 per cent of the post-JSA sample, compared with one-fifth (20 per cent) of the pre-JSA sample, were not on benefit by the time of the first interview. In both samples the groups most likely to have left benefit included those aged under 25, those with qualifications and those unemployed for relatively short periods of time.
The range of different destinations of those leaving benefit changed little between the two surveys, in both cases 48 per cent moved into full-time work. The main difference was an increased proportion (up from 11 per cent to 19 per cent) in those giving their main status as being on a government training programme. In finding a new job the importance of friends and relatives declined from 30 to 25 per cent, though this remained the single most important source of information. The job had been found through a recruitment agency in 13 per cent of cases, an increase from six per cent pre-JSA.
There was a significant reduction in the take-home pay of men after JSA. The average take-home wage of men's post-unemployment job fell from £179 (pre-JSA) to £153 (post-JSA), a reduction of 17 per cent. This reduction could be reflecting changes in labour demand, shorter periods of jobsearch, higher awareness of in-work benefits and perhaps other factors. The level of ‘median’ wages also fell, from £150 to £141, or six per cent. Women’s average net wages rose from £115 to £122 (an increase of six per cent), with median wages rising by 19 per cent. Average weekly hours of work changed little, for men falling from 40 to 39, and for women increasing from 30 to 31.
A number of those leaving benefit said they faced particular problems, most commonly having to wait for wages to be paid, and simply meeting general living expenses, each cited by 19 per cent of post-JSA respondents. Generally speaking, those leaving benefit after JSA was introduced encountered fewer problems than did those leaving benefit in 1995. An important exception to this positive picture was the increased proportion mentioning the time to sort out Housing Benefit, which increased from two to nine per cent of those leaving benefit. This increase may be due to the introduction of the Extended Payment scheme in 1996, and perhaps greater knowledge of the function of Housing Benefit as an in-work benefit.
Once respondents had left unemployment, in the majority of cases their assessment of their financial circumstances improved. In the post-JSA sample, the proportion saying they felt worse off declined from 20 per cent to 14 per cent, whilst those saying they were better off increased slightly from 61 to 63 per cent. Almost half of jobseekers were aware of at least one major work incentive measure (such as the Back to Work Bonus), but generally they had a much lower level of knowledge of the details.
Discussion and main conclusions
The full effects of JSA will take some time to become apparent but it has already achieved significant short-term changes. The proportion of people who found employment between sample selection and interview rose by nine percentage points (from 20 to 29 per cent) although this does not take account of changes in the economy, or in other factors over the period.
Among the clearest changes has been an increase in the pro-active role played by the Employment Service. This has been more the case in some Jobcentres than in others, although the magnitude of some of the changes has been very great. The number of applications being made by jobseekers increased, particularly in the areas of higher unemployment. The overall time spent looking for work changed little, and a small increase had more to do with better job prospects than with JSA. In addition, Jobseeker’s Agreements have attained much greater salience than did the earlier Back to Work Plans.
Overall, the research indicates that JSA has achieved significant changes in the labour market in the short term, however, whether those changes are sustained in the longer term needs to be explored further. The next report, the final report in the series, will address this issue and will control for changes in the economy in order to assess the independent impact of Jobseeker’s Allowance.