Better off on Benefits?

August 12, 2009 / Duane / 22 Comments

We interviewed someone the other day for a role as an office junior. The interview went well and we discussed the silliness of the “no experience” situation – you’ve got no experience so you can’t get a job, you’ve can’t get a job so you can’t get any experience.

She was duly offered the job, which pays the minimum wage for up to the first three months. She accepted. Great!

A couple of hours later she phoned the office to say she couldn’t take the job as she wouldn’t then be able to contribute to her Mums rent – essentially that she’d be better off on benefits.

It reminded me of a conversation I had with James Purnell (yes, name dropping again – sorry!) when he was the Secretary of State for the Department of Work and Pensions. I pointed out that there must be hundreds of thousands of people in a similar situation as this girl.

His response was that benefits should be seen as a safety net, not as an alternative to working. I do agree with him, but the fact is people DO see it like that, whether they should or not.

In business we can’t afford to be idealistic. We perhaps could have paid more for the role to make it worth her while, but a part of me says we shouldn’t as I don’t want to employ people with the short-term mentality of “I’m better of on benefits”.

– Should government policy do more to force people off the dole and into paid work? (It was a New Deal scheme that allowed me to start KashFlow)

– I know I could shop her to the job center for not taking the role and her benefits would be stopped – but I wouldn’t do that. Should I have done?

– Does the current state of the economy and apparent lack of jobs make any difference to how this should be handled?

– Can we, as business owners, do more to address this situation than just create jobs?

– Am I the villain of the piece for only offering minimum wage for the role?

They’re all questions to which I don’t have the answer. Your thoughts?

About Duane Jackson

From childrens' homes to prison to business. Founded one of the first B2B SaaS companies, which he sold at the end of 2013. Read more here.

On Amazon: Four Thousand Days - My Journey from Prison to Business Success

Categories: Rants

Tags: DWP, James Purnell, minimum wage

http://www.metalshark.co.uk/ Beech Horn

Would you of given an advance if asked, in order to cover this initial hurdle and allowing her to start her career. If so then you should feel no guilt for what has happened. Not saying that you should feel guilty for not allowing her an advance, only that it is arguable. What people pay their staff is up to them, remembering that you only get what you pay for.
http://www.creospace.co.uk Gary Dickenson

Pay what the individual is worth. Firstly I don’t pitty you as someone making these decisions. As someone who in the past has been cheesed off with the corporate world for paying me what they can get away with I left to do my own thing and promised myself I’d never be like that if it ever came to being in the same shoes. I hope I keep to my promise.

If you really thought the person was right then show your willingness to believe in them by offering more than you have to. Most people that age want to be believed in and given the opportunity they will give back far more to you as a business than the extra dosh you pay them.

Of course you’re going to get the odd lazy sod who thinks the world owes them but they’ll soon be rooted out and can find someone else.

Good luck, I don’t envy you.
Chris Padfield

Would she really be better off on benefits? I really don’t know the ins and outs of it but if she is living with her Mum I presume she is not getting housing benefit? and jobseeker allowance is less than minimum wage (£50.95/week)
http://www.justinparks.com Justin Parks

Interesting case and nice to see that you have taken the time to consider all sides of the situation.

Given that the young lady is in the undesirable position of a rock and a hard place she had to, or was forced to, make the necessary decision that keeps a roof over her head, forget about economic climates and all that jazz, that’s common sense and logic. Also for her to tell you that reason is a positive. It was the gods honest truth.

I would seriously consider getting in touch with that young lady and having a frank chat about the situation and what you can do to make it work for both of you. As Gary Dickinson mentions, you will more than likely get back ten times whatever you pay her in loyalty and dedication alone by doing this, making up for any inexperience issues, and if not, “they’ll soon be rooted out and can find someone else”.
http://www.metalshark.co.uk/ Beech Horn

By the time you’ve paid for travel and work clothes, I can see it being financially viable to be on job seekers allowance over minimum wage.
http://www.wizzardsblog.com Richard Arblaster

This may come as a shock to some people that know me online, because I post on business websites is that, I am unemployed and on benefits.

I would have been more than happy to work at minimum wage. Do the maths:

£64.30 a week paid fortnightly, or assuming you’d offered her a full time postion say at 37.5 hours a week, works out at £200 gross.

I know which one I’d be going for.
Alex

The ‘no experience’ situation is interesting and familiar to me.

– After being unemployed for a while i’ve had to claim Job Seekers Allowance. Although i’m actively looking for work, and don’t see benefits a a safety net, I only have experience in a couple of areas, neither of which I would like to do as a career (i’m 22).
The Jobcentre run all sorts of schemes to help people back into work, lots of them look very good, but there’s one problem, and that is their ‘6 month rule’. From what i’ve been told by the jobcentre, you have to be claiming benefits for 6 months or more to take advantage of any of the schemes they run.
Eg,- ‘Work Trials’, a list of (ususally) unpaid jobs lasting a week where you take your pick of what interests you and go and get some experience in that field. Great! I wouldn’t mind working for free and getting some experience in a field that i’m interested in (not doing much else afterall!), looks good on your C.V etc. But i’m not elegible for this scheme because I haven’t been claiming benefits for 6 months.
Eg,- Local college run a sheme through the Jobcentre called SHINE. Mostly 1-5 day courses funded by the government in things like Conflict Management, Health and Safety, Planning an Enterprise Activity, Running an Enterprise Activity (2 things i’m particularly interested in), Great! A bit of government funded training that could come in useful in the future, i’ll have some of that thanks! No, i’m not eligible because I haven’t been claiming benefits for 6 months.
Eg,- Some of the jobs advertised on the Jobcentre website are only available to people on the New Deal scheme…you have to have been claiming benefits for 6 months or more to get on the New Deal scheme.
The Jobcentre run all these excellent schemes, but their ‘6 month rule’ hinders people who haven’t been claiming benefits for 6 months from getting a suitable job, or even some experience in a field they’re interested in (work trials).

So. Better off on Benefits?, for me, quite possibly Yes, well for 6 months at least!.
http://www.andygambles.com Andy Gambles

We clearly do not have the full facts and figures.

However my interpretation is that she lives with her Mum who gets housing benefit or social housing. If someone lives in the house who is in employment that housing benefit could be reduced (maybe even withdrawn).

As such she may have to pay the rent to her Mum.
http://www.KashFlow.co.uk Duane Jackson

Thanks for all the comments.

Alex, the 6-month rule is ridiculous. I guess the thinking behind it is that those that have been unep,ployed for 6 months or more need extra help. But in practice – as you perfectly demonstrate – there are people that would benefit from it without wasting 6 months of their working lives.

Chris Padfield – I think it’s possibly more complicated than that. I’m assuming that it would also change the benefits her parent(s) would get if she’s employed. I could be wrong though.

Beech, an advance wasn’t discussed. I’m not sure it’s something I’d be comfotable with though. What happens if the person turns out to be of no use after one day?
Marianne

I don’t see this as just a ‘better off on benefits’ issue – more a cost/cost of living problem that is really difficult to balance between business and prospective employees. From a business perspective, is an office junior worth more than a £12k salary which, once you add NI, overheads etc actually costs a lot more? From the employee’s perspective, they will have done their sums and may think that having free time whilst on benefits is a better option. Better the devil you know, and all that?

In terms of business being able to help solve the problem, would it not be more helpful for the government to give employers NI breaks for taking on any new employees who are currently out of work so that the costs are reduced, AND for the government to give the employee tax/NI breaks for the first six months so that they take home more in their pocket to give them the confidence to take a leap of faith into a new job.
http://www.metalshark.co.uk/ Beech Horn

Fair point over an advance. Although I cannot see another way of meeting in the middle, where it is not just you trying to resolve the issue.
http://www.KashFlow.co.uk Duane Jackson

Marianne, that’s a very good suggestion I think. Much better than the current scheme they have where the government bung you £1,000 if you can keep someone off the dole for 6 months
http://www.intouchcrm.co.uk James White

It is a sad state of affairs that we have got to Duane when someone would rather sit at home and wait for the Govt to feed them than work for a bright, dynamic company

I don’t think its your fault or the girl’s fault. Without getting political, it is simply ridiculous that it can happen.
http://www.mattchedit.com/ Matt Chatterley

@Justin Parks – good point of view, well reasoned too. This is broadly my outlook.

@Duane – I think your post sums up what many people (including a lot of those ON benefits) will agree is the sheer ridiculousness of the way the system(s) in the UK are structured.

OK. There will always be the ‘want nots’ and ‘will nots’ who just don’t want to work – but I do believe they are firmly in the majority and that an awful lot of people are trapped – like your candidate.

However, the government does very little to help – infact, all they really seem to do (as an outsider, looking in – I am fortunate enough to have never been in the situation myself) is to bully and harrass.

Of course, I’m not saying that claiming benefits should be easy – otherwise we would all do it, but the purpose of the system should be to support people while they need it and to help them to change their circumstances so that they don’t need it!

As for “no experience” – I agree here too, and have always said that I would really like to be in a position in a couple of years time to take on one or two school leavers, into “technical trainee” type roles – good kids who for their own reasons don’t want to go to uni (or don’t want to go just yet) – and essentially offer an IT apprenticeship!
http://www.jonathanspencer.net jonathan

I find this interesting because on the values that are expressed here.

Firstly I think like many business people you lack empathy, your focus on your business and her attitude is short sighted.

Give her some credit, she has done the maths. If you had thought well enough of her to offer her the job, there is always a way around it. People with money and those who have struggled to get out of a financial situation often seem to want everyone to have their attitudes or application. This is like Alex Fergueson expecting everyone to be able to play football like a pro.

I would suggest offering her a bonus related to performance given at the end of her probationary period that would make up the rent, and an increase in salary at that point that would make it worth her while. As a previous person commented, you would most likely get a lot back in loyalty.

On the other hand she may not have wanted the job at all and just used this as an excuse.
http://www.askm.co.uk Emily Coltman

My sympathy is with the girl here.

My sister-in-law, a skilled cook, is paid National Minimum Wage for her work in the kitchen at a state-run nursing home. So I’ve seen what it’s like to live on NMW, which is a pittance.

I’m sorry, Duane, but with all due respect I think you should be ashamed of yourself for paying anyone, even an office junior, such a small amount.

At 17 I did a summer’s work experience, doing the sort of work an office junior would do, working full-time, and was paid just over £500 a month. And that was 14 years ago.

Pay her a living wage, if she’s worth it and stays with you then it’ll be a worthwhile investment. Build in a probationary period so that if she doesn’t cut the mustard you can wave her goodbye quickly.

But don’t pay her NMW.

M
captain splat

the minimum wage is a joke- no one can seriously be expected to LIVE on this, AND help rebuid the economy as all the world leaders want us to do?

i bet many firms would pay even LESS, if they could get away with it.

min wage = min loyalty. pay monkeys, get peanuts.

my opininion is free, and worth every penny!
jobwanted!

Tee £500 now, £500 later ‘bung’ is an interesting and cheapskate way for govt to get claimant numbers down..

It works out much cheaper than paying out to cover someones rent, JSA, and council tax for 6 months?

I would not work any any company that offers min wage.. if they are thay hard up, wont last long in this economic climate, so would be back on the dole.
http://www.KashFlow.co.uk Duane Jackson

Thanks all for the comments. As I said in my closing paragraph – they were questions I didn’t have answers too.

@em Personally I think the minimum wage is sufficient for a first job when the employee lives with their parents. But perhaps I’m being naive.

It’s the other comments that got me thinking. Is she worth a higher wage? Would going the extra mile with the salary reap rewards in terms of performance in the role and loyalty?

I suspect the answer to both is “yes”.

So I asked her to come in this afternoon for a chat, which she just has. She was offered the job at the salary she said she needed and she accepted. So a happy ending.

Hopefully she don’t quit after reading this blog!
http://www.metalshark.co.uk/ Beech Horn

Hope she works out and you are rewarded for going the extra mile.
http://www.askm.co.uk Emily Coltman

Respect – you have the openness and honesty to listen to your readers and change your mind.

I suspect that if she does read this blog (and if she’s interested in KashFlow as a company as well as an employer then I think she should do), you have nothing to lose because she knew you upped your offer to her anyway.

Best of luck to you and to her.

M
me

hi i can understand why the employer above only offers minum wage he has a buisness,and you have to keep your overheads as low as possiable.thats understandable,but you have to understand the young ladys point of view,she would be worse of working its not her fault ,its who ever gives her enough benifits not to need to work.and to be fair ,if some one was saying to the workers in the uk ,if you dont work we will cover your pay each week at least 75% would take that.its only for the matter of pride that people dont.which is fair enough.

i have been on benifits for 6 months now.i have tried looking for work but as i am currantly getting roughly £1300 a month thats including my rent and council tax . its hard to find anything that meets this.the job center have told me i have to earn roughly £7-8 a hour and work 45 hours a week mon-sat and i will get £80 more a week than on benifits ,1, take of the £50 on average petrol allowance a week takes that down to £30 a week.also wear and tear on the car roughly £10 a week, plus no more free dental care or glasses and no more winter allowance of a extra £25 a week and the other little perks free travel .every so many months cloths and shoes,free fork lift license.

also i have my other daughter on a saturday so will have to change everything around wont get to see my kids as much or help keep the house tidy plus would have to get another car for my partner so theres another £40 down the drain a week as she needs to get kids to school ect,so i would be so much worse of.i have worked full time since i was 15 and never earned £1300 a month.even when i was a supervisor,

i believe in every1 to there own as long as its not hurting anyone.when i look back on my life i dont want to see my clocking in card and see how many hours i have worked i would rather see that i have spent as much time with family and freinds and enjoyed my life,thats just my point of view everyone to there own of course.

also i even tried working a part time job as the job center said i would be better of ,i went to citizion advice to check this ,and i would have been £1 up and that was a at £6,25 a hour and thats with out takin of the £25 a week petrol ,so working 16 hours or less and still claim is a load of rubbish ,but i surpose there job is to get me back into work.only downside is i have to do this little courses,bit anoying but they do pay my petrol and give me money for lunch aswel .so spose i can sit in a room and do some drawings ,still easier than factory work ect lol

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