Universal Credit system is costly and ineffective for employers, Manchester research reveals

The UK’s employment support system is costly to businesses as they wrestle with large volumes of irrelevant job applications, according to employers in a new report.

The expectation that jobseekers have to apply for a large number of jobs to access Universal Credit (UC) – rather than focusing their skills on relevant jobs – means businesses waste time and resources on these applications, new research from Manchester Metropolitan University has shown.

In the first study of its kind, published today (January 24), more than 100 employers and stakeholders were interviewed about their views on UC and labour market policies, airing concerns they feel excluded from policy decision making and should be involved more.

Employers are also worried about proposals that would see some employees receiving in-work UC being made to liaise with Jobcentres and demonstrate efforts to progress in work, which could damage wellbeing and morale.

This new requirement is set to roll out to low-income 600,000 UC claimants in September.

Dr Katy Jones, Research Fellow in the Decent Work and Productivity Research Centre at Manchester Metropolitan University and lead author of the report, said: “Employers are fundamental to the success of labour market policy, as they have ultimate control over employment opportunities. However, most existing research has focused on individual job seekers rather than the crucial role played by employers.

“Our research demonstrates the importance of action when it comes to employers, showing why supporting people to move into and progress in work should be a shared agenda, in which employers should play a central role.

She added: “Employers voiced concerns about potential negative impact in-work expectations could have on staff well-being, performance and organisational commitment.

“To support improvements in job quality and workforce development, we recommend an effective, locally delivered business support offer focused on people management and development. This should be part of a co-ordinated local skills and employment eco-system.”

The government’s ‘in-work progression’ policy, set to be rolled out from September, means that working Universal Credit claimants will be required to engage with Jobcentres and look for ways to increase their earnings.

This could include taking on more work, progressing in their current workplace or searching for additional or alternative work with a different employer.

Researchers found that the prevalence of low-cost, flexible employment models in the UK labour market means that more work and higher pay is unlikely to be offered on a consistent basis.

Through the interviews with organisations and individuals involved in shaping government policy, the report recommends ways that the government, the Department for Work and Pensions and employers can work together more effectively.

Researchers found that employers are currently engaged in different ways and recommend more co-ordination between government departments with a shared emphasis on supporting transitions into and progression in work.

The findings from the report have already been presented to the All-Party Parliamentary Group on Universal Credit. Chaired by Nigel Mills MP, the group is monitoring UC with aim of sharing best practice in supporting constituents and making recommendations to government to improve policy.

Dr Jones said: “We hope that our report has gone some way to redress employers’ exclusion from research and policy debate relating to Universal Credit and employment support, and that it provides a useful evidence base from which more effective policymaking and practice can develop.”

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