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Alex Andreou, benefit, benefits, Cait Reilly, Coalition, Conservative, Department for Work and Pensions, DWP, economy, fiscal multiplier, government, Iain Duncan Smith, Jobseeker's Allowance, Mandatory Work Activity, Mike Sivier, mikesivier, minimum wage, New Statesman, people, politics, Poundland, profit, social security, something-for-nothing, Tories, Tory, unemployment, Vox Political, welfare, Workfare
“Getting them off-benefit is what we’re going to do,” yelled Iain Duncan Smith on Question Time last year. But why bother, when they can be so profitable for companies taking part in Mandatory Work Activity schemes?
“We’re going to end the ‘something-for-nothing’ culture.”
Sometimes a phrase stands out from everything else that’s said around it, launches itself at your face and forces you to confront the enormity of the lie it encapsulates. You knew this was going to end badly, the moment Iain Duncan Smith (Vox Political’s Monster of the Year, 2012, let’s not forget) opened his face and uttered the words.
He was trying to say that people on Jobseekers’ Allowance (JSA) should not expect to get the benefit without putting something back into society – totally bypassing the fact that they have either already paid towards it, via taxes paid while they were in a previous job, or they will in the future, when they manage to get a job (if such a thing is still achievable in a Tory-led UK).
This was to justify the many ‘Mandatory Work Activity’ schemes onto which jobseekers are currently being put by the thousands, and for which they are being paid only in JSA.
It was only a matter of time before someone identified the flaw in the logic, as Alex Andreou did in the New Statesman when he, rightly, wrote: “Such schemes do not end the “something for nothing culture”. They simply elevate it to the corporate level.”
How many weeks was Cait Reilly supposed to spend stacking shelves at Poundland – was it four? Let’s say four. So assuming 30 hours a week, if she had been employed on the minimum wage, she would have earned £742.80.
Instead, she would have received JSA at, what, £56.25 per week? That’s £225. From the taxpayer, not Poundland.
So Poundland, which runs more than 390 stores and whose annual profit in 2010 was £21,500,000, would have had the benefit of nearly £750 worth of work, for nothing. But the gravy train doesn’t even stop there!
Employees of all profit-making companies are taken on because they add to the firm’s profits in some way. Therefore we can assume that, as a result of a person stacking shelves at Poundland, a shopper will come along, see something the stacker has stacked, and buy it – creating a profit for the company.
How many times would this happen during a jobseeker’s four-week tenure on ‘Mandatory Work Activity’? There’s no way of knowing. Let’s apply a conservative estimate based on the standard levels of a fiscal multiplier, at the low end, and say that adds a further 60p to the value of every pound that Ms Reilly would have earned.
Total: 1,188.48 profit for Poundland.
Now multiply that by the number of people going through ‘Mandatory Work Activity’ and you’ll see how much these companies are making, courtesy of the taxpayer – because, don’t forget, working people are paying for jobseekers to make money for these firms. We know 878,000 people were put on these schemes between June 2011 and July 2012 – that comes out as 752,571 in a year, on average.
Total profit for companies using people on ‘Mandatory Work Activity’ should therefore be: £894,416,090. Nearly £1 billion.
Loss to the taxpayer: £16,933,000.*
If that isn’t enough to get you hot under the collar, consider this: The profits created for companies by ‘Mandatory Work Activity’ go to company bosses and shareholders, all of whom may be expected to be rich already. They won’t be putting that money back into the economy; they’ll be banking it. Possibly offshore.
If they had employed those jobseekers and paid them at minimum wage, that would have put £559,010,060, per year, back into the economy. These workers would have spent the money in their communities, on commodities that they needed, thus providing a valuable boost to shops and businesses that have been deprived of this support by Coalition government policies.
And the companies concerned would still have made £335,406,030. More than a third of a billion pounds – not to be sniffed at!
It’s mathematical proof of the Conservative Party’s economic incompetence. Making the rich richer and the poor poorer will ruin the country.
*This article does not include payments to Work Placement Provider companies because, not having gone through this system myself, I’m not sure whether it should be applied or not. My understanding is they would get £600 per referral, with higher figures if a jobseeker actually got a job afterwards. Can anyone confirm this is what would happen here?
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