Sanctions help jobseekers into poor quality work?

Some of the papers the DWP and I have been reading suggest that (imposed) sanctions help people into jobs while others say the contrary. I've found more work based on Swiss data that says "Benefitt sanctions not only reduce unemployment durations but also reduce post-unemployment employment duration and earnings."

This is quite logical. For a start, the data is from 1998-2003 when the Swiss unemployment rate was around 1.5-4.5% (See http://www.tradingeconomics.com/switzerland/unemployment-rate) so there may have been "scroungers" refusing to take available jobs. However, sanctioning them has pushed them into lower quality jobs. This is understandable too - jobseekers will have taken just about any job to alleviate the crisis but the sanctions actually harmed longer term prospects.  In more detail:

"The clear persistence of negative sanction effects on earnings up to two years after unemployment exit may be explained by lock-in into the accepted job or by faster return to unemployment. Once the individual has accepted a lower-quality-job, it may be difficult for him/her to catch up with the non-sanctioned people by quickly changing to a better job. Moreover, individuals who accept a worse paid job are more likely to leave this job and return to unemployment. Both lines of reasoning explain why sanctions lead to a reduction in post unemployment earnings."

When you study the DWP literature, it is all about getting people into work as soon as possible. The idea that being a more selective jobseeker could be a better long-term approach doesn't seem to have occurred to them.

Related posts here and here and now here

Sanctions help jobseekers into work? (Contrary evidence)

I wrote recently about the debate over the effectiveness of sanction as a tool to get the unemployed to try harder and get jobs. The DWP had come up with a load of evidence that it is effective although that evidence is non-UK and old enough to be from a different employment climate. I've asked for more recent research based on UK data but in the meantime I've found some myself. It comes from Howard Reed of Landman Economics and is published by Oxfam.

HOW EFFECTIVE ARE BENEFIT SANCTIONS? An investigation into the effectiveness of the post-2012 sanctions regime for Jobseeker's Allowance claimants uses a technique similar to that used Boockmann to analyse data from Germany during 2006-7. Sanction rates vary from place to place - as I have shown myself - so this should be reflected in re-employment rates. Boockmann used this to show that sanctions helped people into work but Reed found "The results show no evidence that Jobcentre Plus districts with higher rates of sanctions between October 2012 and June 2014 experienced greater decreases in unemployment or increases in employment than districts where sanctions were used less often" and goes on to say "Overall, this report finds that sanctions are an ineffective tool for improving labour market performance."

A slight weakness in this paper is that it appears to accept the geographic variation in sanction rates as essentially random. There's some work by David Webster showing that sanction rates tend to be higher in areas of high unemployment. Perhaps staff are keen to encourage jobseekers to try harder in jobs deserts? Somewhat futile!

A further related post is here

Sanctions help jobseekers into work?

Benefit sanctions are supposed to give jobseekers an incentive to take necessary action to get in to work. Agencies such as Citizens Advice say they can be counter-productive when actually imposed "Claimants are distracted from job-hunting as they focus on putting food on the table and keeping a roof over their head." In contrast, on 4 February 2015, Rt Hon Esther McVey MP, Minister of State for Employment told the Work and Pensions Committee "... and there is further research that, should somebody have been sanctioned, it helps them into work afterwards."

So I asked for the evidence and (unusually for the DWP) they sent it!

"The minister referred to a range of international evidence regarding the impacts on
employment following a benefit sanction. Recent studies from Denmark, Germany,
Netherlands and Switzerland show an increased employment uptake for recipients of
unemployment insurance or welfare benefits after a benefit sanction has been imposed"

See below for the research they've relied on together with some other data I thought was relevant:

Source	Location	Dates	Typical Sanction	Unemployment then/January 2015
van den Berg G, van der Klaauw B, van Ours J (2004) Punitive sanctions and the transition rate from welfare to work. J Labor Econ 22:211–241	Holland	2003-2005	20% 1-2 months	6%/7.2%
Abbring J, van den Berg G, van Ours J (2005) The effect of unemployment insurance sanctions on the transition rate from unemployment to employment. Econ J 115:602–630	Holland	1992-1998(?)	5% 4 weeks	?/7.2%
The Effect of Punitive Sanctions on the Transition rate from Welfare to Work Qureshi	Denmark	2007-8	33% 3 weeks	2.2%/4.6%
van der Klaauw B, van Ours J (2013) Carrot and stick: how re-employment bonuses and benefit sanctions affect exit rates from welfare. J Appl Econometrics 28(2):275–298	Rotterdam, Holland	2000-2003	10%	5.3% */7.2%
Svarer M (2011) The effect of sanctions on the exit rate from unemployment: evidence from Denmark. Economica 78(312):751–778	Denmark	2003-2005	2-3 days or 3 weeks 15%	5.7%/4.6%
The Effect of Benefit Sanctions on the Duration of Unemployment Rafael Lalive	Switzerland	1997-8	3 weeks 100%	4.5%/3.5%
Boockmann et al (2014) Intensifying the use of benefit sanctions: an effective tool to increase employment? IZA Journal of Labor Policy 3:21	Germany	2006-7	10%	9.5%/5%

Data source Click on the "Jobless figure for the country of interest. A * indicates incomplete data.

We could argue about the definition of"recent" but let's not other than to observe that the data for this research mostly pre-dates the general rise in unemployment during 2008.

During this period it was employers who had a hard time in the job market so lighting a fire under lazy "jobseekers" might well have persuaded them to take jobs that would otherwise have remained vacant.

At times of high unemployment it's still possible that some sanctioned jobseekers will compete very hard and get jobs that the non-sanctioned also tried for but total unemployment will be unaffected.

What would be useful is some research from a time of high unemployment, preferably from Britain and I've asked DWP if they have any However, the study in Germany at a time of 9.5% unemployment (Boockman) is close but it makes the usual mistake of  looking at higher employment of a small group subjected to a particular treatment while ignoring the displacement of their untreated competitors.

So, strictly speaking, DWP have answered the question. Things we don't know include:

• How much evidence to the contrary is out there
• If the DWP is aware of it
• If there is more relevant UK evidence from a time of high unemployment

 

Severity of Sanctions 

 

This is another important factor. Most of the sanctions in the table above are less severe than current UK regime. In the UK, sanctions are for a minimum of 4 weeks and can go up to 3 years. Nominally they are 100% benefit cuts although the little advertised and restrictive hardship payments system can reduce them to to 40%. Form this is could be argued that the UK is more coercive leading to better results. There's two main objections to this logic:

• The usual one about the futility of coercing people into non-existent jobs
• Whether the jobseeker is close to destitution or not

To expand on the second point, some jobseekers have sufficient savings for a sanction not to be an immediate distraction from jobseeking while still unpleasant and "motivating". It's also plausible that for some claimants, it does (as mentioned above) render them "distracted from job-hunting as they focus on putting food on the table and keeping a roof over their head"

So, the research that's really needed should look at the effects of sanctions on near-destitute jobseekers. One way of detecting this is to look at the fate of sanctioned jobseekers  with very low savings. The DWP should have the savings data but so far as I know, they haven't attempted a correlation with fate.

Perhaps an FOI request for another day?

Part 2: Sanctions help jobseekers into work? (Contrary evidence)

Benefit related deaths

It's often alleged that there is a connection between how the DWP treats claimants and the untimely death of some of them. The DWP sometimes investigates these cases, EG:

"The Department for Work and Pensions (DWP) has carried out 60 secret reviews into benefit-related deaths in less than three years, Disability News Service (DNS) can reveal."

Understandably, people want to see these reviews in case wrongdoing is identified. Also understandably, the DWP don't publish them saying "Section 123 of the Social Security Administration Act (SSSA) 1992 makes it an offence for anyone who is employed in social security administration to disclose without lawful authority any information which he acquired in the course of that employment and which relates to a particular person" See here for an example FOI request where this and other arguments are deployed

However, a more modest request got better results Here the request was mainly for numbers

In the "60 peer reviews following the death of a customer":

1. How many reviews identified that all local and national standards had been
followed?
2. How many reviews identified that some local or national standards had not
been followed?
3. How many reviews identified that some local or national standards need to
be revised/improved?
4. What action has there been to date in the cases referred to in my questions
2 & 3 above?

This is essence of the response:

in fact only 49 of these reviews had been conducted in circumstances where the claimant had died.
...
33 out of the 49 cases referred to above contained recommendations for
consideration at either national or local level.

National recommendations have been referred to the Customer Journey team
for inclusion in their regular reviews. Local recommendations have been
referred to the appropriate office to be taken forward.

This isn't actually an admission of wrongdoing but it seems unlikely that many of the "recommendations" will be drawing attention to good practice in these unfortunate cases,

10May2015:  This related FOI response shows that 10 out of 49 cases had a sanction at some point during their claim.

Sanctions comprehensive monitoring regime

The DWP tells the world "Sanctions are used as a last resort and the DWP has put in place a comprehensive monitoring regime to ensure that sanctions are always and only applied where appropriate to do so." (https://www.gov.uk/government/news/benefit-sanctions-ending-the-something-for-nothing-culture) There is a contrary view that many sanctions are capricious, arbitrary, bullying and driven by targets to get people off benefits. (EG: http://stupidsanctions.tumblr.com/)


So what's the truth? I chose to focus on the DWP's "comprehensive monitoring regime" as that sounds to me like data and evidence and we love that.


So I asked about it. Initially I just got some Quality Assurance Frameworks and a DMA Referrals Checklist. Interesting but no data. After asking for a review I got a "summary of the quality checks undertaken" - I've plotted the accuracy rate below together with the number of cases checked:

We can see that for some months, accuracy hovered between 90% and 95% which if you want to be picky doesn't quite match "always and only applied". I was more interested in the decline that set in during Autumn 2014. The peak in the number of cases checked is interesting too. It looks like "something happened" around that time and I'd be interested in ideas about what?

I think it will be interesting to ask the same question again later in the year to see if the decline is a decline or just part of a blip. 

Given the lack of data before April 2014, I wonder if the "comprehensive monitoring regime" wasn't actually in place back in November 2013 when the original claim was made?

Sanctions used as a Last Resort

DWP people are often quoted as saying that sanctions are used as a "Last Resort" EG:

"Sanctions are applied as a last resort when claimants fail to do enough to find work, fail to attend appointments or have turned down job offers..." (1)

However, there are many claims that they as used as a first resort (2)

So what's the truth? We may soon find out via an FOI request "Number of people sanctioned for missing just one JSA appointment". This doesn't simply ask the obvious question, it also asks:

"If DWP don’t have this number, then how can Iain Duncan Smith possibly know, or be believed, that JSA benefit sanctions for failure to attend an adviser interview were only applied as a last resort?"

Strictly speaking, DWP can decline to answer that by arguing that it isn't "recorded information" but I note with approval the use of a technique I've blogged about before - ask for recorded information that should exist, force an admission that it doesn't exist and then comment adversely.

Another pertinent FOI request is about  "Sanctions comprehensive monitoring regime" which refers to this government statement:

"Sanctions are used as a last resort and the DWP has put in place a comprehensive monitoring regime to ensure that sanctions are always and only applied where appropriate to do so."

Finally, a request that asks rather directly for the evidence relied on for these statements that sanctions are used as a "last resort"

These requests are at various stages - stay tuned for updates

DWP -STILL- have no idea if Workfare costs jobs or not

It's often alleged by Boycott Workfare and others that Workfare costs jobs. Why would employers recruit paid workers when they can get slaves from the Jobcentre for nothing? The DWP, aware of this allegation counter it by having "strict" guidelines that paid jobs must not be displaced. Nearly a year ago I took to wondering if they did any research, auditing, etc. to make sure the guidelines were kept to. The answer was they didn't.

Recently I asked essentially the same question again in hopes that the DWP would have now done some work on it. After a tussle it emerged that they still have no idea if Workfare costs jobs or not

``Although there are strict guidelines in place that providers must follow when sourcing appropriate placements I can confirm that we do not hold the information you requested for MWA and CWP placements``

This is very disappointing. As I pointed out a couple of weeks ago, the Irish equivalent of the DWP have commissioned some proper research and even chucked some "employers" off their scheme for displacing jobs.

The other disappointing aspect of this response is the determination of the DWP to coyly avoid admitting that they'd put no effort into this important matter. Their initial response gives lots of information about guidelines, the benevolent intent of schemes, how they are delivered, the contracted providers and meetings. What it does not do is provide the recorded information I requested on "all research intended to measure compliance".

I solved this by asking them to do a Review of their response and quoted the very useful Section 1(1) of the FOI Act that says they have to either provide the information or say that they don't hold it.

You may find this useful  if you want to be sure that a Government does not know something you think it should. For more on this technique, see here