A step too far: Employer perspectives on in-work conditionality

Abstract

This chapter explores employer perspectives on the extension of behavioural conditionality to working social security claimants (‘in-work conditionality’). As policymakers across Europe and other developed nations have pursued increasingly interventionist approaches to activating the unemployed through conditional welfare policies, the UK has gone a significant and ‘unprecedented’ step further by requiring those in receipt of in-work benefits to demonstrate their efforts to increase their working hours and/or pay. As the actors ultimately in control over the jobs people can access and progress in, understanding employer perspectives on this new policy development is critical, which, however, has so far been overlooked by policymakers and researchers. We address this omission through presenting original analysis of 84 semi-structured interviews conducted with a diverse group of employers. We find that while the UK’s Work First approach to activation has seemingly encountered little resistance from employers to date, this new Work First, Work More approach may be a step too far. We contribute theoretically by identifying a potential role for employers as latent path disruptors in policy development, and challenge the commonly-held assumption that employers are typically supportive of extensions of behavioural conditionality to social security claimants.

Introduction

Policymakers across Europe and other developed nations have pursued increasingly interventionist approaches to activating unemployed people through conditional welfare policies. Here, access to working-age social security benefits is contingent upon individuals adhering to specific obligations and behavioural patterns, which to varying degrees are balanced by support to find and move into work (Dwyer et al., 2022). Alongside this, many countries also provide in-work benefits which are not subject to behavioural conditions in order to further incentivise work entry and to support job sustainment (Clasen, 2020).

In the UK, as in other liberal welfare regimes, the intensification of conditionality has been pursued with particular vigour, against a backdrop of laissez-faire economic policy. It adopts a ‘Work First’ approach to active labour market policy (ALMP), whereby policy and employment support interventions are primarily focused on moving unemployed people into any job quickly (Daguerre, 2004). Expectations for jobseekers to engage in intensive job seeking activities are enforced by financial benefit sanctions alongside minimal support, and an emphasis is placed on moving people off benefits and into any job role, regardless of job quality or fit (Green and Sissons, 2023; Jones et al., 2022; Van Berkel et al., 2017). While critiqued on this basis, Work First ALMP arguably complements low pay flexible labour markets such as the UK’s by supplying a cheap and compliant labour force, with policymakers assuming the support of employers.

However, as it becomes increasingly apparent that deregulated labour markets fail to provide the means for many workers to obtain an adequate living standard (Ratti and Garcia-Muñoz, 2022) and as concerns rise among policymakers in the UK and elsewhere about a ‘bloated’ in-work benefits bill (Clasen, 2020), the focus of research and policy debate has increasingly shifted beyond unemployed people to the working poor, including an emerging emphasis on progression in work (Ray et al., 2014; Senghaas et al., 2022). Against this backdrop, and in an ‘unprecedented’ move (Clegg, 2015; SSAC, 2017), UK policymakers are taking further strides down a path of increased behavioural conditionality (DWP, 2010), with ALMP seemingly evolving into a ‘Work First, Work More’ approach (Jones, 2022). Expectations vary according to various factors including caring responsibilities, although the default expectation is that in-work benefit claimants will continue to look for work until they are working a 35-h week. This marks a further acceleration down the path of increasing conditionality, which has not (yet) been pursued elsewhere in Europe.

While existing scholarship has highlighted the need to consider employers and the ‘demand side’ of ALMP (Ingold and McGurk, 2023; Orton et al., 2018), the extension of conditionality to in-work benefit claimants makes their inclusion even more urgent. As those ultimately in control of the jobs people can access and progress in, understanding employer perspectives on these new policy developments is critical.

This article presents original analysis of new data from the first major independent study to explore employers’ perceptions and experiences of Universal Credit (UC) and the evolving ALMP that underpins it, and specifically their views on the future direction of new in-work interventions. Drawing on data generated through interviews with 84 diverse employers, this article is underpinned by three key questions: (i) Do employers welcome the proposed extension of conditionality to in-work benefit claimants? (ii) Is in-work conditionality likely to be an effective approach for helping people to progress in work? (iii) From the employers’ perspective, what alternative approaches could be more effective?

This article adds to growing evidence focused on the demand side of ALMP (Bredgaard, 2018; Ingold and McGurk, 2023; Van der Aa and Van Berkel, 2014), and makes a significant empirical and theoretical contribution to social policy debates about both the extension and intensification of conditionality, and effective approaches for supporting the progression of workers on low incomes. Drawing on the policy paths literature (Hogan et al., 2022), we contribute theoretically by identifying the potential role of employers as latent actors – or path disruptors – in policy development, who have until now been excluded from policy debate, but who are nevertheless integral to the successful development of in-work policies.

The article is structured as follows: the next sections provide an overview of the UK’s evolving policy context in relation to the development of in-work ALMP, the employer’s role within this and relevant concepts in the policy paths literature. The methodology is outlined before insights from interviews with employers are presented. We then discuss and conclude with recommendations for policy and practice.

Work first, work more: Recent developments in UK ALMP

UK policymakers in the field of activation have pursued increasingly interventionist methods (Martin, 2016; Whitworth, 2016). Recent decades have seen both the intensification of conditionality (for example, through harsher benefit sanctions) and its extension to more population groups including disabled people, alongside significant welfare retrenchment (Dwyer et al., 2022). Firmly established as an archetypal Work First regime (Peck and Theodore, 2000), successive welfare reforms have placed a central focus on moving people into any job quickly, backed up by a harsh sanctioning regime to ensure compliance. Fixated on the ‘behaviour’ of unemployed social security recipients, the DWP has been accused of being ‘institutionally and culturally incapable’ of developing policy which is not underpinned by conditionality and the threat of sanction (Pollard, 2019: 7). This is despite the growing weight of evidence exposing the ineffectiveness and immorality of punitive sanctions-based approaches (DWP, 2023a; Dwyer et al., 2022).

In-work conditionality (IWC) is the latest development in this policy field, made possible by the merging of in- and out-of-work benefits through the new integrated Universal Credit (UC) system. UC is now the main working-age benefit for both those who are out of work, or in work on a low income. Introduced in the UK in 2013 as part of a package of radical and wide-ranging welfare reforms pursued by successive Conservative-led governments, the policy intention behind UC was to establish a new form of financial support that is reduced at a consistent and managed rate as people return to work and increase their working hours and earnings (DWP, 2010) to avoid claimants experiencing financial cliff edges. Implementation is currently scheduled for completion by 2028 after repeated delays. Through replacing and merging two previously separate systems of out-of-work social security payments (that is, income-based Jobseekers Allowance and Employment and Support Allowance ¹ ) and in-work benefits (that is, Working Tax Credits, supporting those on a low income) into one system, this policy change has opened up the ‘internationally unprecedented’ (SSAC, 2017) possibility of taking what is a well-established system of behavioural conditionality centred on unemployed social security claimants and extending it to workers on a low income. While in a strict sense IWC can be observed in other European countries (for example, where those working in very low hours jobs continue to count as unemployed and so are treated in the same way by activation policies), in-work benefits have historically been positioned as the carrots to the sticks of sanctions-backed conditionality and have not come with job-seeking and other work-related requirements (Clasen, 2020; Clegg, 2015). Making these conditional signifies a new era for ALMP (which for now appears unique to the UK) (DWP, 2010).

The Universal Credit 2010 White Paper asserts that conditionality for working claimants will ‘encourage people to increase their earnings and hours in a way that we have never been able to do before, helping people along a journey toward financial independence from the state’ (DWP, 2010: 31). The policy is framed in terms of the DWP’s ‘ABC’ approach to tackling unemployment, which emphasises movements into: Any Job, then a Better Job, then a Career (Howard, 2022). However, early trialling and guidance on what the DWP positively frame as its ‘In-Work Progression’ policy suggests that in reality, ‘Work First, then Work More’ is a more accurate description as conditionality remains the central tool (Jones, 2022). For unemployed people engaging with the UC system, the emphasis on taking any job remains firmly entrenched: ‘UC seeks to strengthen incentives to enter any paid work, and amongst those who are already in work, to increase hours or earnings’ (DWP, 2017: 3). An emphasis on progression appears to be a secondary consideration, despite evidence that progressing from low paid poor-quality work is difficult and cycling between low and no pay is common (Whittaker and Hurrell, 2013). Furthermore, while the job quality literature emphasises more holistic conceptualisations including pay increases and greater stability (Warhurst et al., 2017) under UC, progression appears more narrowly defined in terms of increasing the quantity of work in which individuals engage (that is, number of hours worked) rather than its quality and whether or not it offers genuine scope for improving a person’s position in the labour market (Wright and Dwyer, 2022).

Following discouraging results from early trialling of IWC (DWP, 2018b), the McGregor-Smith ‘In-Work Progression Commission’ was tasked by the DWP to inform future policy direction. The Commission’s review advocated supportive approaches, based on incentives rather than sanctions, and highlighted the importance that other policy areas (skills, transport, childcare) align with the Progression agenda (McGregor-Smith, 2021). Further trialling was subsequently undertaken which offered in-work support on a voluntary basis (DWP, 2021). However, the focus on voluntary interventions was short-lived: a series of statements were recently made involving the successive acceleration of policy implementation (DWP, 2023b).

Current UC guidance states that working claimants may need to demonstrate that they are actively trying to: (i) increase their hours, (ii) look for ways to progress in their current workplace, (iii) search for additional work with a different employer, and/or (iv) take up alternative work with a different employer (DWP, 2018a), with an emphasis on this being the individual’s responsibility rather than something that also impacts significantly upon employers. Conditionality requirements are triggered if individuals fall below an Administrative Earnings Threshold (AET): currently set at an equivalent of 18 h per week at the UK minimum wage. Depending on wider circumstances, those below this threshold fall into an ‘intensive work search’ regime, while those above fall into a ‘light touch regime’ (Miller and Rose, 2023). The DWP are currently exploring the further extension of conditionality to the ‘light touch’ group, which is expected to be implemented in Spring 2024. Once fully implemented, approximately one million working people will fall within the scope of the new ‘in-work’ regime (SSAC, 2017).

Employers and their ‘passive’ role in policy development

Despite having important implications for those who employ workers potentially subject to IWC, employers have been largely absent from these policy developments (Jones, 2022), and have historically not resisted successive reforms extending the parameters of the UK’s conditional welfare policy. Employer consultation about their views on IWC has been minimal (Fitzpatrick and Chapman, 2021; Jones et al., 2019). For example, employers interviewed as part of DWP’s trialling were not asked directly about conditionality, nor how this might impact on their workplaces and their likely response (Jones, 2022). The McGregor-Smith review involved limited engagement with employers, yet their perspectives on IWC were again strikingly absent. Moreover, most businesses contributing to government consultation in this area (albeit marginally) are notably large organisations which do not reflect the profile of UK businesses, where most employment (61% in 2021) is provided by small and medium sized enterprises (BEIS, 2021). This absence is intriguing given IWC potentially expects more of employers as actors who have traditionally had a ‘somewhat passive’ role within this policy field (Work and Pensions Committee, 2016). In 2016, the UK Parliamentary Work and Pensions Committee reported that employers ‘were almost universally unaware’ of the new policy. While existing scholarship has highlighted an important role for employer associations in influencing employer participation in ALMPs (Martin and Swank, 2012; Valizade et al., 2023) industry leaders including the Confederation of British Industry (CBI) appear reticent to engage until the policy is formally rolled out (Jones, 2022).

Policy paths and employers as latent disruptors

The policy paths literature, and in particular the emergence of path dependency theory as a response to institutional change (Ebbinghaus, 2009; Schreyögg and Sydow, 2020), provides a helpful lens for considering these developments, and employers’ (as yet unrealised) potential in shaping future policy trajectories through providing policymakers with the impetus to break from the ‘old’ paths of institutional legacies (Kiess et al., 2017). While historical institutionalism contains a diversity of theoretical approaches to explaining institutional change and evolution (Hemerijck, 2012; Streek, 2014; Thelen et al., 2015), it is path dependency that affords us the tools to understand the role of employers most clearly in shaping policy in this field. While framed as an innovative and new policy, IWC is arguably an incremental extension of ALMP predicated on increasing behavioural conditionality, and which in recent years has advanced from a ‘creeping’ (Dwyer, 2004) to a ‘ubiquitous’ (Dwyer and Wright, 2014) place within UK policymaking. This aligns with notions of path dependency (Pierson, 1994), which recognises ‘the propensity for welfare systems to be self-perpetuating because existing institutions and prevailing values limit policy choices’ (Walker, 2005: 309) and ‘path reinforcement’ as the ‘strategic agency’ of policy actors has locked in a particular kind of policy content (Hogan et al., 2022). Shaped by ‘institutional legacies’, the ‘established policy path’ positions the problem of unemployment (and now working poverty) as an individualised behavioural one. Overlooking structural causes of unemployment and low paid, insecure work, the UK government has concurrently remained committed to a broadly neoliberal economic agenda, overseeing rising labour market precarity alongside fading policy commitments to the ‘Good Work’ agenda (Jones and Kumar, 2022). Exposing a level of ‘institutional inertia’ (Torfing, 2009: 70), UK policymakers focus on mitigating the effects of structural inequalities with ‘palliative’ approaches (Sayer, 2018). This ultimately sustains the status quo rather than more radical and potentially transformational solutions (Jones and Kumar, 2022; Torfing, 2009).

Tacit endorsement from UK employers may have contributed to positive feedback loops that have helped to sustain this policy path. An increasingly punitive welfare system, combined with low benefit levels, provides the flexible and compliant labour force needed to sustain the UK’s low-pay–low-productivity labour market (Berry, 2014; Greer, 2016; Wiggan, 2015). Qualitative research has exposed the disempowering effects of Work First approaches for workers (Briken and Taylor, 2018; Jones et al., 2024), and others have theorised the ways in which this works to disempower them in relation to employers through coercive ALMPs (Greer, 2016; Wiggan, 2015). This, combined with a lack of resistance from employers to date to the UK’s Work First approach to ALMP, may suggest such an approach works well for organisations (Jones, 2022). Furthermore, employers both in the UK and internationally have been argued to both benefit from and welcome the growth in ‘in-work’ financial support provided without behavioural conditions through tax credits (Au-Yeung, 2022; Farnsworth, 2015), leading to critique by some for legitimising and subsidising poor-quality work (Grover, 2016). Employers may therefore have a vested interest in defending the status quo (Pierson, 1996), or at the very least not blocking its advance. Considering IWC, Wright and Dwyer (2022) conclude that it creates a ‘coerced-worker claimant’ at the mercy of the demand of both the state and employers. Similarly, De Wispelaere (2016: 622) condemn tax benefit integration through UC as merely ‘a scheme that reinforces the workfare state’. Thus, some employers may be expected to welcome this new policy development, if it means labour market power imbalances are further tipped in their favour.

The extent, however, to which the business community welcomes Work First approaches is, in reality, unknown, and their shared interest in conditional welfare reform has perhaps been assumed or taken for granted by both policymakers and researchers alike. Indeed, while research with employers is scant (Orton et al., 2018), a small body of work has exposed significant dissatisfaction among employers with Work First approaches (Ingold, 2020), manifested in low levels of employer engagement with public employment services and poor perceptions regarding the desirability of employing unemployed people. Ingold (2020: 237), for example, found that the UK’s conditionality regime ‘risks irrevocably “tarnishing” candidates, which undermines, rather than enhances, their chances of securing employment through ALMPs’. Furthermore, as diverse actors (in terms of factors including size, geography and ethos), employer responses are likely to be ambiguous rather than unified. As individuals influenced by broader motivations and beliefs (Swank, 2002), they are also part of a public whose support for conditionality does not (yet) extend to workers on a low income (Abbas and Chrisp, 2023). Furthermore, existing critiques tend to overlook the potential for shared interests between workers and employers highlighted by pluralist approaches (Jones et al., 2022).

The exclusion of employers from policy development to date arguably results from the ability of policy actors ‘to restrict debate and discussion to the existing path, dampen new ideas, limit new actors and generally stifle change’ (Hogan et al., 2022). In the UK, a fragmented policy context and lack of institutional mechanisms prevents the meaningful inclusion of actors (including employers) who are impacted by policies in the policymaking process and inhibits co-ordination across different policy agendas (Valizade et al., 2023). This could be one source of the ‘institutional inertia’ highlighted above (Torfing, 2009: 71). Considering the varied extent of employer involvement in ALMP development in other institutional contexts supports the notion that employers could have a more significant role in altering policy trajectories (Martin and Swank, 2012). For example, Ingold (2020) highlights backlash from Danish employers against expectations that unemployed social security claimants were expected to apply for four jobs per week, following which policymakers abandoned this new regulation. This reflects ‘Denmark’s coordinated social partnership approach, wherein employers are included in the development and implementation of ALMPs’ (Ingold, 2020: 244).

Thus, while UK policy development in this field appears set on an increasingly conditional trajectory, international examples show that path sustainment or dependency ‘is not immutable’ (Walker, 2005: 18). Although policy change is a complex and multifaceted process, the outcomes of which are difficult to predict (Hogan et al., 2022), Hogan et al.’s (2022) model of ‘policy punctuations’ identifies scope for alterations to both the direction and pace of policy trajectories (that is, via ‘critical junctures’, ‘path clearing’ and ‘blocking’, and even ‘path termination’). Whereas recent contributions to the literature have considered the role of exogenous shocks including the COVID-19 pandemic as potential catalysts for altering policy trajectories (Hogan et al., 2022), the revisiting of power resource theory as a means of better understanding institutional change suggests the role of policy actors and coalitions is also potentially significant (Refslund and Arnholtz, 2021). Torfing (2009: 76) and others argue that windows of opportunity may ‘open if a considerable number of social and political actors agree that the current policy path is either inadequate or malfunctioning and that there is an urgent need for intentional reform’.

Avoiding the determinism of path dependency approaches, and having identified employers as a key – yet often overlooked – actor in research and policy debate on activation, this chapter considers the potential implications of their varied reactions to IWC. A key question is whether the relative harmony between UK employers and the welfare system will remain once conditionality is extended to their own workers, and if not, will any resulting discord prompt a re-examination of and ultimately help to shift existing paradigms? Active resistance from employers may see them join coalitions with other influencers seeking to champion alternative ideas. We thereby position employers as latent path disruptors, by which we mean actors whose support for the extension of conditionality to date has been assumed, but who may be prompted to oppose and ‘block’ further advancement down this policy path if IWC is acknowledged and recognised as a ‘step too far’. More broadly, as we demonstrate, insights from employers can help to highlight the limits of supply-side policy reform, which could potentially prompt a reconsideration of this policy direction and establish a new ‘critical juncture’ as broader determinants of in-work progression are identified.

Methods

This chapter presents new analysis from the first major independent research project exploring employer perspectives of UC and related developments in UK ALMP (ESRC Grant Reference: ES/V004093/1). The original project considered how UK ALMPs are understood and experienced by employers; how these policies affect UK businesses – including how they recruit, retain and progress their staff, how these impacts vary in different sectors and how can employment services work effectively with employers, in order to lead to better outcomes for individuals and the wider economy. This chapter draws on data from 84 employers who participated in this project. Interviews were conducted between July 2021 and May 2022 and lasted an average of approximately 1 hour. Notably, this was within a context of an incredibly challenging and evolving economic backdrop: employers at the beginning of data collection were grappling with the challenges of survival emerging from the COVID-19 pandemic, and towards the end were seeking to navigate an emergent recruitment crisis as a new post-pandemic economic landscape began to form.

Employers and local stakeholders were recruited purposively (Mason, 2002) from Greater Manchester and West Yorkshire – two major conurbations in the North of England with diverse economic geographies including major cities and small towns. These were also areas with a relatively high number of UC claimants. Employers were broadly defined as individuals within an organisation with influence and/or power over recruitment and/or line management (including owner-managers, HR managers and line managers). No prior knowledge of IWC or UK ALMP was expected of participants. Indeed, demonstrating their continued exclusion from policy engagement in this field, employers were almost ‘universally unaware’ (Work and Pensions Committee, 2016) of the possible extension of conditionality to working UC claimants. Interviewees were drawn from businesses of varying sizes from micro-organisations to large multi-national businesses; 60% (50 employers) were drawn from small and medium sized enterprises (SMEs) – while the sample is not a representative one, it is arguably more reflective of the population of UK businesses than that included in policy consultations to date.

An additional novel element to this study was its sectoral approach to sampling (compared to previous work exploring the intersections between work and welfare which have taken a more general approach), with employers primarily drawn from sectors with a higher-than-average proportion of low paid workers, specifically social care (20), hospitality, leisure and tourism (21) and retail and warehousing (22). These sectors were selected because they are a common destination for jobseekers; they provide a high volume of employment in the UK and they are also where challenges relating to low pay and limited progression are most acute (see for example, Ussher, 2016). Pilot work preceding this study (Jones et al., 2019) informed this strategy, which identified common practices within the three chosen sectors which created the potential for conflict with the expectations placed on UC claimants (the prevalence of zero-hours contracts in social care, for example). A further quarter of the sample was drawn from other sectors, in recognition that UC is a household benefit and can be claimed by those on a low income in any job. Detailed semi-structured topic guides were constructed to explore and understand participants’ experiences and policy interactions/awareness. This included an exploration of employer perspectives on UC and the potential introduction of IWC, as well as understanding how they may respond to this new policy context and how they believe public employment services should best engage with them to support work entry and the progression of low-paid workers. Topic guides were informed and reviewed by an expert advisory group which included representatives from the Department for Work and Pensions – their inclusion was critical to ensure this evolving policy development was being represented accurately to participants.

With participants’ consent, all interviews were audio recorded and transcribed verbatim. Transcripts were then analysed thematically and inductively utilising NVivo software. A coding framework was created, based on a combination of (i) key research questions, (ii) emergent themes resulting from detailed and repeated reading of a selection of transcripts, and (iii) existing concepts developed through previous research on employers and ALMP. For anonymity, each participant has a unique identifier denoting the geography and sector from which they were drawn, for example, ‘E-GM-SC-02’ refers to the second employer from the social care sector interviewed in Greater Manchester.

Findings

Below we present findings relating to the research questions that underpin this chapter. In the first two sections we consider whether employers welcome the proposed extension of conditionality to working social security claimants. Reflecting the heterogeneity of the sample, respondents shared diverse perspectives which were formed through a combination of personal and professional views. However, two main positions emerged reflecting both support for and opposition to IWC, and each is presented below. A third section considers whether IWC is likely to be an effective approach for supporting progression, alongside alternative approaches, identified both directly and indirectly from the accounts of interviewees. These findings are then considered in relation to path dependence theory in our concluding section.

A welcome advancement for some: ‘Anything that increases the amount of fish is great’

A significant minority of employers were unconcerned and even welcomed the introduction of IWC. Positive sentiments appeared mainly to focus on the expectations for staff to increase the number of hours they worked (rather than broader aspects of progression including accessing higher pay). Support on this basis was especially apparent from organisations operating within low-paying sectors (social care, hospitality and retail and warehousing). Citing pressing resourcing and recruitment challenges, combined with a recognition that a high proportion of their existing workforce were likely to be in receipt of in-work benefits, requirements for working UC claimants to increase their working hours were considered potentially helpful to ease these issues.

‘It would definitely make things easier… we’ve got hours there, we could offer these people the hours.’ (E-GM-SC-02)

In addition to welcoming the push for existing staff to take on more hours, several employers also felt that if the policy resulted in more people applying for jobs (if, for example, they were required to take on multiple jobs to satisfy work-search requirements), this would also help to increase the pool of labour able and willing to take on low-paid entry level roles:

‘[A]nything that increases the pool of potential candidates for us is a good thing… we’re kind of fishing, anything that increases the amount of fish is great.’ (E-GM-H-07)

In this respect, some employers perceived IWC to be a welcome development which aligns with existing business models and management practices. Such an extension would continue to feed the UK’s low-cost liberal employment model, with IWC policies aligning with employer demand for a workforce ready to fill immediate resource gaps. While viewed positively by some, several interviewees voiced concern that more exploitative employers would feel emboldened by such an approach to focus on short-term labour supply over the longer-term development and progression of their workforce:

‘[Some employers are] used to that conveyer belt approach really of the revolving door of not everyone making it, and they probably factor that in to everything that they do. It just seems a waste of effort really. They’re just playing the numbers game, aren’t they… It’s just geared for high turnover really.’ (E-GM-R-07)

A small number of participants felt that employers other than themselves may respond to IWC by paying staff more, particularly if the policy was identified as a key driver of poor retention. In this sense IWC could theoretically disrupt existing business models if employers responded by paying more in order to retain their staff. However, some felt that this would likely only occur within higher skilled roles. Conversely, they felt the policy would have little impact on low skilled low paid jobs given the relative ease at which employers could fill posts. Even if IWC had a negative impact on retention (see below), this would be unlikely to concern some employers who view labour as easily replaceable. Thus, the ‘coerced worker claimant’ (Wright and Dwyer, 2022) is also a disposable one:

‘If it’s a low-skilled job a low-paid job, the attrition rate is higher, but it’s an easy fill.’ (E-GM-R-10)

On this basis then, a sizeable cohort of employers is unlikely to resist new developments and encourage any ‘policy punctuations’ inflection points to occur, which continues to feed into a system in which workers can easily be replaced. Consequently, employer support (whether tacit or explicit) may help to reinforce this ongoing path of policymaking design.

It is notable though that positive assessments of IWC appeared to be underpinned by an assumption from employers that they would continue to wield the most power in the employment relationship:

‘[O]ur contracts do actually state that they need to be flexible… and it does say about covering extra shifts and things.’ (E-GM-SC-03)

Thus, working claimants will continue to be trapped between a punitive welfare regime and an exploitative labour market (Jones et al., 2024). However, as highlighted by other participants below, while in the abstract IWC may be seen to be helpful to employers seeking a more plentiful labour supply, in reality this policy may mean that their demands are superseded by the DWP – and indeed those of other employers if claimants are expected to balance multiple jobs to satisfy new IWC requirements. As one retail employer reflected:

‘If they had another job, if they’re trying to balance two jobs in one week, I don’t know who’s getting the priority. Is it me, or is it the other role?… that’s where you’re going to run into issues.’ (E-GM-R-09)

This exposes the additional tensions which may emerge between workers, employers and the state as a result of a policy emphasis on more work – including taking on multiple jobs – over more meaningful, vertical progression within a role or up a career ladder.

Trouble ahead: Employer’s potential opposition to in-work conditionality

In contrast to more welcoming reactions towards IWC highlighted above, a striking majority of interviewees expressed opposition to these developments. Most significantly, their reflections on IWC expose a tension between rigid requirements to take on more work (that is, until claimants are working a full-time 35-h week) and the UK’s long-standing flexible employment model. Especially for those employers operating within flexible service sectors, holding key expectations regarding staff flexibility was a central feature of their business models. Whereas more hours were reportedly often available, many reflected that it would often not be possible to offer these on a consistent basis, given fluctuating patterns of demand. In the retail and hospitality sectors, for example, individuals are typically employed on a part-time basis, but are able (and often expected) to regularly ‘flex up’ their working hours in line with operational demand. Because of the seasonal nature of fluctuating patterns of demand shaping the availability of shifts and hours within these sectors, it was reportedly often the case that employers cannot typically provide staff with a guaranteed number of working hours in any given week, month or year. Reflecting on the implications of IWC, employers expressed their concern that: ‘the flexibility… would definitely be shot’ (E-GM-R-01). Thus, IWC could impact upon organisations in particular sectors more acutely than others, along with small and medium enterprises with less operational capacity to absorb these changes effectively.

Others reported wage cost restraints which curtailed the availability of more working hours and/or higher pay:

‘We’ve got 150 staff, so if we just gave all of them an extra two hours work a week, that’s like 300 hours and it’s roughly £10 an hour, so that’s £3,000 a week extra. It just isn’t there to spend.’ (E-GM-H-04)

Here, several interviewees pointed to ongoing financial challenges associated with the impact of the pandemic and high energy bills which they felt constrained their ability to offer more hours/higher pay. This was felt to be particularly challenging for small businesses:

‘[T]hat way of looking at things would be putting a lot of pressure on… micro-businesses like us, than it would places like… massive employers that don’t pay a fair wage and they treat staff really poorly. Yes, it’s good to know that [employee] gets that extra support [from UC, but] to implement that now would perhaps be, potentially, quite damaging to those businesses that have managed to survive for the last two years.’ (E-GM-R-08)

For others, a focus on profitability rather than affordability appeared to be the underpinning factor, as increasing the income of workers did not align with low-cost business models which focus on reducing wage costs to deliver shareholder profits: ‘Most of us [supermarkets] have low-cost operating models. Most of us have very tight margins’ (E-WY-R-02).

Our interviews thus reveal employers’ reliance on the in-work benefits system, which some participants ostensibly believed should be there to supplement part-time work. Here we arguably observe the result of an overemphasis of policymaking and debate centred on the personal responsibility of the ‘claimant’. This has – perhaps unwittingly – shaped employers’ expectations and reliance on the in-work benefits system. Reflecting on whether workers should be expected to take on multiple jobs, for example, one retail employer felt UC rather than wages should ensure a person’s essential income:

‘They shouldn’t have to have two jobs, should they? Universal Credit should fill the gap between part-time work and what they need to survive on. That’s the idea of Universal Credit, surely.’ (E-GM-R-06)

More generally, employers also voiced concerns that this policy direction would engender a less committed workforce, increased turnover and poorer staff well-being: a ‘coerced’ worker isn’t a good and productive one, and IWC was felt likely to lead to increased levels of stress and burnout.

‘[I]f you force people to say, “You must do dah, dah, dah, dah, dah otherwise I’m going to take all your money off you”, when retail is a stressful environment already. Well-being in the retail sector is not good at the moment. Everybody is burnt out. Everybody is stressed.’ (E-WY-R-02)

Some employers were also concerned that IWC might result in losing valuable members of their workforce if they were unable to offer the progression opportunities required to satisfy DWP requirements, potentially exacerbating existing (and for some, increasingly severe) sector-wide recruitment and retention challenges:

‘In hospitality, it’d be an absolute kick in the teeth to lose really good talent just purely because they need more hours for Universal Credit.’ (E-WY-H-05)

Several interviewees were also critical of the intrusiveness of IWC, expressing opposition to government interference in how they manage their business, exposing a clash between laissez-faire free market economics and more interventionist forms of ALMP. While the policy focus is on claimant behaviour, businesses were clear that they would also feel the impact:

[I]f they’re having expectations put on them from [Jobcentres]… and it doesn’t work for the business… They’re saying, “Well, I need this” and you just have to say no, it’s not going to create a good relationship, is it?’ (E-WY-H-09)

Thus, expanding conditionality to in-work benefit claimants potentially clashes with systems in which worker flexibility is both assumed and expected, and which the Work First approach has actively reinforced. Employers’ reliance on in-work benefits to sustain low pay and flexible employment models is exposed, demonstrating the price paid for the high employment levels celebrated by advocates of the UK’s Work First approach (Berry, 2014). As a threat to this, IWC may encounter some resistance. Any associated backlash from employers could result in significant opposition from a sizeable proportion of the business community, bringing potential disruption to this policy path.

Exposing the limits of institutional inertia: supporting progression requires a new direction

Regardless of whether IWC is welcomed or resisted by employers, our interviews also exposed the inevitable shortcomings of a ‘progression’ policy centred on simply extending conditionality to those in work. First, an emphasis on conditionality for in-work benefit claimants ignores the more holistic support and personalised interventions needed to facilitate in-work progression. Employers were critical of what they expected to be a ‘one-size-fits-all’ policy, acknowledging that progression was likely to require tailored interventions depending on the needs and circumstances of individual workers. Echoing core tenets of the McGregor-Smith review, and reflecting the demographic groups most likely to be impacted by such policy developments, ensuring working UC claimants were able to access appropriate support with childcare was identified as a key factor integral to effectively supporting progression. Several expressed their concerns that without addressing wider structural issues such as high childcare costs, parents’ labour supply would continue to be constrained, with IWC having little impact: ‘We’re not set up to support with childcare in the way the country should be’ (E-GM-R-05).

Employers also identified the importance of access to reliable transport links, alongside opportunities to develop and gain new skills and qualifications through education and training. They advocated a shift away from a Work First model to incorporate a more supportive emphasis on longer-term career development:

‘Why not include, yes, training in part of that? You could be training, going to university or doing a part-time course. Why can’t they use that as part of your looking for work? That’s you actively looking for a job in the long term, not short term, immediately.’ (E-GM-R-03)

Such arguments were made by several employers, and contrasts with the overwhelming focus on horizontal progression over consideration for vertical upskilling and career progression under the DWP’s current conditionality-focused policy regime. Second, as shown above, interviewee accounts highlight the potential for a clash between rigid ALMP requirements and the flexible reality of work in the UK labour market. Employers pointed to the prevalence of flat employment structures in which a large proportion of staff are trapped in low paid roles. A lack of progression opportunities for people working part-time in particular was also made clear:

‘There’s little chance to progress within an organisation because you’re so part-time… it might not be worth putting someone that’s only doing 16 hours in a higher role.’ (E-GM-H-06).

Clearly then, and as reflected on by some of our interviewees, improving progression outcomes in work is dependent on changes in employer practices. A considerable majority of participants believed that employers had a critical role to play in helping to support people to both move into and progress in work. They identified several different strategies for individual organisations to do more to support this agenda, including offering better pay, more stable contracts, better quality flexible work, access to quality training opportunities and clearer progression pathways:

‘If you’re going to employ someone, you’re taking on a responsibility to ensure that person has a salary and can pay their own bills and all that kind of stuff… when you enter into that, it is an obligation. You have to support them and help them succeed.’ (E-GM-R-09)

However, improving the ‘demand side’ was not always felt to be possible, given many of the various sectoral and/or financial constraints and wider challenges highlighted above. Ultimately though, scope for progression was felt to hinge on both firm performance and the adoption of good employment practices:

‘[W]e’ve got to work in an economy where our own businesses are doing well. That’s the key to everything.’ (E-GM-R-04)

Rather than continuing along the path of more conditionality, then, these reflections suggest that policymakers should therefore place more emphasis on the ‘demand side’, ensuring that quality opportunities that will support work entry and progression are more widely available.

Concluding discussion

This article has considered employer perspectives on new developments in UK ALMP, which extend behavioural conditionality to in-work benefit claimants. Consistent with the policy paths literature, the introduction of IWC arguably represents the continued ‘creep’ of conditionality (Dwyer, 2004), simply extending ‘Work First’ to a ‘Work First, then Work More’ approach (Jones, 2022). However, while seemingly on the same path, our findings expose a tension and likely clash between liberal employment models, and the extension of rigid behavioural expectations to in-work benefits. Whereas Work First ALMP has long been recognised as complementary to low paid flexible labour markets, critiqued for feeding them with a ready supply of compliant and cheap labour (Berry, 2014; Greer, 2016; Wiggan, 2015) a new IWC approach may not play out so harmoniously if it effectively means turning off the tap. While the UK has historically been a leading advocate of ALMP (Valizade et al., 2023), a critical juncture may occur if this development is considered a step too far for employers. It also further highlights the limitations of approaches focused overwhelmingly on individual behaviour. Our findings therefore add a further ‘international warning to potential policy emulators’ and analysts across Europe and beyond, in addition to accounts from working claimants’ perspectives (Wright and Dwyer, 2022). Through our analysis, employers emerge as latent actors – or path disruptors – whose views have been hidden in existing research and policy debates, but who could be activated to expose poor policy choices and identify areas for more meaningful interventions that could support the progression of low-paid workers.

We found that some employers may welcome the creation of a new ‘coerced worker claimant’ (Wright and Dwyer, 2022), pleased by the prospect that workers could receive a further push from the welfare system into low paid jobs where they are also disposable. Here, so long as established institutional logics remain unaltered, in-work benefit claimants will remain caught between an increasingly interventionist welfare system while flexible requirements of a liberal labour market continue unfettered (Whitworth, 2016). However, most employers view the policy more critically. Many participants raised significant concerns that this policy will result in a less flexible labour force which is no longer able to serve the peaks and troughs of fluctuating demand in a service economy, alongside broader concerns about staff well-being and engagement. Resultant employer opposition to IWC could create a moment of ‘policy punctuation’, by ‘blocking’ its advance, if policymakers are prepared to open up debate and the concerns of new actors including employers are recognised (Hogan et al., 2022).

More broadly, employer insights are helpful for researchers working across European contexts who are concerned about supporting progression and poverty alleviation among low-income households – by fundamentally helping to create a ‘critical juncture’ after which an alternative path is pursued (Hogan et al., 2022). In the UK and other regimes pursuing ‘Work First’ activation policies, this would involve substantial deviation from the existing policy path. Within the confines of a liberal economic model, if there are requirements to progress while in work, policymakers should arguably revise their commitment to moving people into ‘Any’ job quickly, and instead place greater emphasis on supporting people into jobs with prospects for progression. Consistent with findings from the UK McGregor-Smith review, consultations with employers also demonstrate that supporting people to move into and progress in work must be approached holistically – investing meaningfully in human capital development, and ensuring that there is a robust social infrastructure in place (including childcare) to support workers rather than leaving them at the mercy of a low-pay low-productivity labour market where they are trapped in low paid jobs (Jones and Kumar, 2022).

More fundamentally, employer reflections expose the limits of a supply-side solution to what is ultimately a demand-side problem. For example, although some participants acknowledged their own critical role in supporting progression, for instance by providing clearer career pathways, re-designing jobs and supporting skills development, there are inevitable limits to this in sectors with flat employment structures and where employers view constraints to pay growth and security as inevitable and central to their business models. Substantial action is therefore required outside of the realms of ALMP for in-work interventions to genuinely support progression (including a strengthened regulatory framework and coherent industrial strategy).

As policymakers around the world shift their attention from unemployed people to the working poor, it is critical that employers are considered as central stakeholders in the development and implementation of any in-work ALMP. However, scope for activating these latent actors and unlocking ‘policy innovations [that would] seriously challenge the underlying program theory’ (Torfing, 2009: 72) will vary in different contexts. In the UK, whether the discontent highlighted above will result in resistance from business community remains to be seen. Notably, the policy is still not being widely communicated to employers, and rather is expected to reach them subliminally via the ripple effects of a policy routed through their staff. Further, government and ‘employer representative’ organisations may continue to avoid the question and ignore the issues raised here. While employer associations may influence employer participation in particular activation programmes or schemes (Valizade et al., 2023), they are yet to give any significant voice to employers on broader shifts in policy that have implications for both workers and organisations alike. UK policymakers should strengthen institutions to guide (and if necessary, challenge) the development of policy. In contrast, more effective interventions may be more likely to develop in countries where the input of social actors is greater, such as Denmark where employers, trade unions and policymakers take joint responsibility for enacting social policies (Valizade et al., 2023).

Supplemental Material

Supplemental Material - A step too far: Employer perspectives on in-work conditionality

Supplemental Material for A step too far: Employer perspectives on in-work conditionality by Katy Jones, and Calum Carson in Journal of European Social Policy.