How can you have a swing towards outcome-based funding of welfare to work services when there is simply no work for people to do? After all, if there is a fixed level of opportunity in the labour market – and this is squeezed by a contracting economy at the same time as the dole queue is lengthened by public sector cuts – how can there be any outcomes to get? And how can the Work Programme possibly succeed when there are no jobs out there?

While this view may sound reasonable, I believe it is based on a dangerous set of misconceptions.

The challenges faced by individuals trapped in unemployment are never to be underestimated. The personal price of worklessness is significant, and then there’s the dreadful impact it has on families and their children, on communities and wider society. And the obvious fiscal costs – increased benefit payments and reduced taxes ¬– are easy to count. Cast your perspective slightly wider and you might also count the costs of poor health, of educational underattainment, of excluded communities requiring more policing, and so on.

Supply and demand

We also, of course, operate within a wider national and global economic context, which will exert pressures on our labour market, making the situation worse in some regions than others. However, while recognising the personal and social costs of long-term unemployment, it is important that we reject the very limited view of the labour market that suggests there are no jobs and therefore no hope. This view fails to grasp that the relationship between the supply of labour (the jobseekers) and the demand for it (the vacancies) is a dynamic one.

To suggest that the jobs available are capped in some way is to fall into the trap of the ‘lump of labour’ fallacy. This economic misunderstanding is behind some of our newspapers’ more alarmist headlines about immigration, which suggest that someone from over there is coming over here and stealing our jobs. In fact, periods of immigration are often followed by periods of increased economic prosperity, because the immigration has brought activity and a supply of motivated labour, which has in turn stimulated demand.

Entrepreneurial jobseekers

Effective interventional welfare to work services aim to create and enable ‘entrepreneurial jobseekers’. They do this by:

• targeting supply-side investments to ensure jobseekers have the right skills;
• rebuilding jobseekers’ confidence, self-esteem and motivation;
• working to remove practical barriers to work, for example, by paying for tools and equipment.

Effective services might also continue to:

• develop an individual’s skills once in work so that they progress (leaving an opportunity behind for another jobseeker);
• work with employers to anticipate their skills/resource needs;
• bridge the gap with skills provision to address vocational need;
• integrate psychological and physiological expertise with pre-employment support;
• set up and even deliver associated services such as childcare or community transport.

Hidden vacancies

The most successful mainstream welfare to work contracts of the last decade, targeting long-term unemployment, were the Employment Zones (EZs). Established in areas with a history of intransigent worklessness, these roughly doubled the number of over-25s securing and sustaining work in these locations. Significantly, they did this without displacing other employment programmes in the areas – notably, New Deal for Young People continued to perform at the same level. They also did it by largely using ‘hidden vacancies’ – up to 80% of the jobs they secured had never been advertised. The EZs created new opportunities by empowering those looking for work.

Jobseekers are not simply passive players waiting for the right job to land in their laps. The challenge of welfare to work provision is in breaking down passive self-perceptions and enabling active jobseekers to emerge from within unemployment.

Welfare to work is not a safety net, catching and holding people in a static condition, it is a trampoline, bouncing people back into employment and wellbeing. In the coming years, millions of people will be relying on the timely, professional, effective deployment of such labour market intervention.