IEA: New Benefits Crackdown for Jobseekers is the Right Unbureaucratic Move

Setting benefit levels involves a highly unpleasant trade-off. If they are set too low, they may fail to prevent hardship among those who genuinely struggle. If they are set too high, they erode work incentives among those who are not too eager to leave the benefit system quickly.

Fortunately, there is a way out of this dilemma: conditionality. If policymakers want to encourage work, they do not have to go for the "workhouse approach" of trying to make life on benefits deliberately unpleasant.

They can instead make sure that benefits come with the right kinds of strings attached. Hardship-preventing benefit levels do not have to discourage work, as long as their receipt is conditional on the type of behaviour which makes long-term worklessness less likely.

That is why critics of the new conditions for out-of-work benefits, who see them as a way of making the system "harsher", are mistaken.

Under the new rules, applicants for Jobseekers' Allowance (JSA) will have to show that they have undertaken some basic steps to prepare for a job search, such as composing a CV and registering on the government's "Universal Jobmatch" site. They will also have to meet more regularly with a case manager, and failure to comply with these requirements will lead to benefit sanctions.

Of course, the government's steps are somewhat symbolic. Having a CV, or a website profile, is not a precise indicator of how serious an applicant is about their work search effort.

But it is a relatively simple, unbureaucratic way of signalising to claimants that they are required to prepare for work, and of distinguishing the many who are perfectly prepared to do so from the few who are not.

The majority of applicants want to work, and for them, these changes will be immaterial, because these are steps which they would have taken anyway.

The most important determinant of work levels is the ability of the labour market to generate jobs. But on its own, a job market recovery is not going to solve everything.

In the decade preceding the recession, the number of working-age adults who were in long-term (less than five years) receipt of out-of-work benefits constantly fluctuated around two million.

This is a problem that only a proper system of conditionality and work requirements can solve. Ideally, we should go for a fully-fledged 'workfare' scheme as they did successfully in Wisconsin. The government's new requirements go nowhere near that, but they are a sensible small step.

Dr Kristian Niemietz is a senior research fellow at the thanktank the Institute of Economic Affairs