In-Work Benefits: Effective Social Protection or ‘Emperor's New Clothes’?
| Published date | 01 June 2014 |
| Author | Mel Cousins |
| DOI | 10.1177/138826271401600201 |
| Date | 01 June 2014 |
| Subject Matter | Article |
100 I ntersentia
INWORK BENEFITS:
EFFECTIVE SOCIAL PROTECTION
OR ‘EMPEROR’S NEW CLOTHES’?
M C*
Abstract
In work benets (IWBs) were initially introduced in the UK and USA in the 1970s
and have expanded greatly in scope and geographical coverage in recent decades.1
Recent studies by organis ations such as the OECD have presented a generally positive
picture of IWBs, but a review of th e evidence suggests that th eir achievements are less
clear-cut and more contestable than might be expected. e pur pose of this article
is to examine the role of in-work benets (IWBs) in four OECD countries (France,
New Zealand, UK and the USA) in order to es tablish the impact these benets have
had on employment and pover ty and to assess the extent to which they meet their
objectives.
Drawing on a review of the internation al literature and an in-depth study of the four
countries concer ned, this article argues that I WBs can play a useful role in increa sing
the employment rate of specic groups. However, the impact of IWBs is limited and
their eect on overall employ ment is small. e large-scale ex pansion of IWBs in the
UK and USA would appear to be driven by par ticular policy views in these societies
rather than by the policy outcomes achie ved by IWBs, and this trend is unlikely to be
replicated, especial ly in continental Europe.
Keywords: construction of welfare; in-work benets; in-work poverty; low pay; work
incentives
* Dr. Mel Cousins is a Rese arch Associate at Trinit y College, Dubli n; Address: School of Socia l Work
and Social Pol icy, Trinity C ollege, Dublin 2, Irela nd; phone: +353 1 896 1000; e-mail: cousinsm@
tcd.ie.
1 e study covers b oth in-work benets and ta x credits which fu ll the same fu nction.
In-Work Benets: Eective So cial Protection or ‘Empe ror’s New Clothes’?
European Jour nal of Social Secu rity, Volume 16 (2014), No. 2 101
1. INTRODUCTION AND CONTEXT
For the purpose of this study, social protection and relevant ta x measures can be
categorised as:
– out-of-work benets (such as jobseekers benets);
– in-work benets; and
– universal (and quasi-universa l) benets, mainly child-related.
Historically, countries have provided out-of-work benets and, to a greater or lesser
extent, universal c hild benets. IWBs are a more recent invention. However, in order
to encourage people to take up work, many countries (to a greater or lesser extent)
allowed claimants of out-of-work benets to continue to receive those benets when
they took up some work. Many European countries continue to rely mainly on t his
approach and have limited (if any) IWBs. IWBs were introduced, principal ly in the
UK and USA, in the 1970s, and have expa nded signicantly in recent years (see
Immervoll and Pears on 2009 for a recent review).2 us, several countries (including
those discussed in more detail below) now have a combined system of in-work and
out-of-work benets. e IWBs considered in this study are al l payable on a long-term
basis rather than on a ‘t ransitional’ basis, e.g. where benet s are paid over a short time
period to encourage former welfare recipients to retur n to work.3 In recent policy
documents, the EU Commission (2012) has presented IWBs as one tool to assist in
‘stepping-up’ job creation as part of the broader ‘maki ng work pay’ agenda.
Having had experience of this approach for a number of decades, the UK
government has now concluded that a dual approach is sub-optima l for a range of
reasons, including the fac t that it leads to ‘a complex array of benets which interact
in complicated ways, creating per verse incentives and pena lties, confusion and
administr ative cost’ (DWP 2012). Accordingly, the UK government is in t he process of
introducing an integrated system of benet s for those of working age (called universal
cred it).
Although it is not the focus of this study, it is important to recal l that the extent
to which child support is provided on a un iversal or quasi-universal basis plays
an important role in relation to t he issue of work incentives.4 A system where all
child support is provided universally to those out of and in work creates no work
disincentives, whereas a hig hly targeted system of child suppor t is likely to create work
disincentives, as t his support is withdrawn on tak ing up or increasing employment.
2 See a lso B et al.(2009); I (2012); I and S (2 012).
3 As i n the case of the well-known C anadian Self Suci ency Project (SSP). See M et
al.(2002). A number of EU count ries do currently oper ate such schemes, such as the I rish Back-to-
Work scheme.
4 e ter m ‘child support’ is us ed here to mean state n ancial support for c hildren. It does not inc lude
the UK usage refer ring to child mai ntenance payments.
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