Mechanisation. Robots. The digital economy. The gig economy. The sharing economy. The world of work is changing but our creaky welfare system is still based on a 20th-century model of work, designed when soldiers were returning from fighting World War II.
Then, memories of the great depression of the 1920s were still fresh – and all political parties agreed that, after four hard years of pulling together in the national interest, a return to the Hungry Thirties wasn’t an option. Returning heroes deserved proper jobs – and proper jobs were conceived as permanent and full-time, with regular hours that paid enough to allow the worker (presumed to be a man) to support a stay-at-home wife who would look after the family.
The National Insurance system was designed to provide assistance in the case of temporary calamities – an accident, an illness, or an employer going bust. A welfare claimant was seen simply as somebody who had fallen (temporarily) on hard times – benefits were a right.
As the years have passed, it has become clear that the ideal template of the proper job, worker and family that underpins this model didn’t always fit the reality. Some jobs were low-paid and casual, some women refused to stay at home or couldn’t afford to, families broke up or never formed in the first place. Economic restructuring that began in the 1970s led to the disappearance of whole industries, creating ghost towns where once there had been mines, mills or shipyards. Suddenly life on the dole looked worryingly long-term.
Fast forward 70 years and we find a labour market that would be completely unrecognisable to a time traveller from the 1940s. When and how men and women work has been transformed. Even those who still have regular 40-hours-a-week contracts may be expected to carry their work around with them, checking emails on their phone and taking calls wherever they happen to be. Others may be on zero-hours or temporary contracts, employed through agencies or online platforms, summoned unpredictably to work at a moment’s notice via an app on a smartphone, or doing interminable unpaid internships before they can hope to receive a salary.
Moving with the times
For workers hovering precariously on the edge of survival trying to patch together a livelihood from multiple jobs, never sure when the next piece of work or income will show up, a benefits system in which the only categories are “employed” or “seeking work” is of little help. At the same time, daytime television programmes such as Saints and Scroungers, Benefits Britain: Life on the Dole, and Benefits Street drive home the message that there is no middle ground: you are either a hardworking taxpayer, or a lazy scrounger. In times of austerity, when governments aim to save money wherever they can, this is a convenient message. But the reality is not so simple.
Many workers are not taxpayers – they actually receive money from the state to top up wages that are too low to live on. The proportion of spending on benefits for unemployed people is relatively tiny – for every pound paid out in Jobseekers Allowance in 2013, five were paid out in working-age tax credits to top up workers’ earnings. Tax credits are not really so much a subsidy to workers as to their stingy employers who get away with paying below-subsistence wages in the knowledge that the taxpayer will stump up the rest.
The current benefit system seems to have reinvented the 19th-century categories of “deserving” and “undeserving” poor, using the carcass of the 20th-century welfare state as an administrative framework. But neither 19th-century values nor 20th-century structures are fit for purpose in the fluid, just-in-time conditions of 21st-century labour markets and an unpredictable, digital, globalised economy.
We should go back to the drawing board and develop a system that provides basic security and dignity for all while still allowing for work to be organised flexibly. One possible solution is to give everybody a basic income – a guaranteed minimum income for everyone, available as a right. This would raise the standard of living and reduce poverty among the most vulnerable, but would also allow workers to move flexibly in and out of paid work, education and care work without being subjected to the expensive, demeaning and dysfunctional inquisitorial procedures of the current benefits system that sees only the largely exclusionary categories of “work” and “claiming benefits”.
Such a system would certainly be technically feasible as studies have suggested, and do away with much inefficient, stigmatising and expensive bureaucracy. But it is not a panacea. To be truly equitable it would require safeguards in relation to public services, minimum wages and immigrants’ rights, which would not be easy.
If you’re interested in the idea of a basic income, check out our report