Friday, 12 April 2013

Another myth busted: ‘strivers v skivers’

nef (the new economics foundation) has produced another mythbuster, this time debunking fallacies about welfare expenditure.

Only 2.6% of Britain’s social expenditure is received by able-bodied unemployed people. And the situation is dynamic; these people are not permanently unemployed:
In reality, people slip between employment and unemployment, often within the space of a few months, as the economy relies increasingly on short-term, low pay, insecure contracts. This happens even more in areas where the economy is especially weak. In Teesside, one of the UK’s struggling economic regions, research has found that, for many people, ‘shuttling between benefits and jobs’ has become their predominant experience of working life.
People in full-time work but whose pay is too little to live on receive a much greater share of benefits:
A far greater proportion of social expenditure is spent on people in paid work, through working tax credits, than is spent on the fit and able-bodied unemployed. Last year expenditure on Income Support and Working Tax Credits amounted to £13.8bn, more than double the £4.9bn paid out to JSA [Job Seeker’s Allowance] claimants. Taking into account all the different benefits available, and distinguishing between different groups by their primary benefit, 20.8 per cent of the total benefits bill is spent on employed people on low incomes, while only 2.6 per cent is actually spent on the able-bodied unemployed.
For the first time ever, in-work poverty has overtaken workless poverty, with 6.1 million people in working households living in poverty. Instead of tackling the problem of low income, the government is subsidising employers offering poor quality employment through working tax credits. Taxpayers are picking up the bill by topping up wages so that paid workers can feed and house themselves and their families.
The ‘strivers v skivers’ argument suggests there are two distinct groups in society and tries to pit them against one another. In reality, this caricature is a complete myth, and certainly no serious basis for devising any reform.

Postscript: Some sense on this subject from Chris Dillow (with thanks to Nick Barlow for spotting it).

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