How Do ‘Liberal’ Welfare States Activate the Unemployed?

‘Activation’ has become an increasingly popular buzzword for both Labour and Conservative governments alike; despite its discursive stubbornness as a somewhat fetishized term, the noun is unavoidably loaded semantically, and has become nebulous in terms of consensus surrounding its pragmatic appropriateness. The liberal welfare states that have emerged across nation-states over the last century have sparked myriad debates concerning labour market activation policies and their usefulness in terms of both informing and measuring policy. The present analysis focuses on the activation of the unemployed from the perspective of the contemporary liberal welfare state, with the conclusive aim of ascertaining how liberal welfare states do indeed activate the unemployed. Examining the ideological nexus between labour market policy, social security paradigms, tax, fiscal and public spending, wage dynamics and benefits testing, the paper will review both macroeconomic and microeconomic aspects to catalyse an understanding of liberal governments’ employment activation programmes. Considering the equally subjective nature of the terms ‘liberal’ and ‘activation’, the analysis will inevitably need to attempt at least a general circumscription of the two terms before looking in detail at specific policy on the activation of the unemployed.

For the purposes of our current aim, it is conducive to understand the liberal welfare state in terms of the ‘classic liberal welfare state’; an agreed commitment to certain market principles and an economic liberalism is inextricably linked to the conception of a liberal welfare state. In cross-national comparisons, in the context of Europe at least, the United Kingdom is frequently propagated as the prototypical liberal welfare state. A framing of the classic Beveridge post-war welfare state as overly bureaucratic and insidiously interventionist seems to have underpinned the modus operandi of ideological convergence in the context of British social security administration.

Strong opposition to heavily statist welfare programmes, such as those of the Nordic governments, has been instrumental in terms of creating a tenable liberal argument for welfare administration in the UK and, to an extent, the US. The classically overextended ascription of ‘liberal’, then, need not be problematic if we frame the liberal welfare state in terms of its considerable preference for individualism and market dynamics. Activation, understandably, has less complex ramifications when looking at policy issues; for the purpose of our current discourse, we will take the concept of ‘activating the unemployed’ as referring to the general description of those social policies aimed at encouraging as many citizens as possible to participate in the labour market. A fundamental belief in the power of work and employment as a route out of poverty, or want, is integral to the ‘activation of the unemployed’.

Turning our attention specifically to social policy in the context of liberal welfare states, the UK welfare state in 1997 under New Labour is an indispensable point of examination. In regards to overarching policy structure, it was primarily family values and responsibilities that were championed as ideological catalysts for labour market activation. Greater flexibility and choice in family and working life was a key undercurrent of New Labour welfare state reforms. Although the consistent use of the ‘third way’ was promoted as a means of selling New Labour employment policy initiatives, one may contend that this pleasant notion was nothing more than an elaborate marketing strategy. In the realm of activation policies for the unemployed, financial support from the state in relation to children saw a decisive shift towards tax credits; the idea of integrating the different offshoots of state support is lucidly evident. In the October of 1999, for example, the benefit for families on low wages, known as the Family Credit at the time, was replaced by the Working Families Tax Credit. From the language alone, we see that the trend under New Labour towards a more liberal welfare state was overwhelming; the policy here is a refundable tax credit, payable even where it exceeded the family’s income tax liability. The Child Tax Credit and the Working Tax Credit under New Labour extended in-work support to adults without children and provided a certain number of subsidies for childcare expenses for some working parents.

Looking at specific results, the 2004-5 tax year was estimated to have brought an increase in Mothers’ incomes by approximately 10 % (Campbell, 2008: 462). Furthermore, the average UK child support allowance was 61% higher in 2006 than 1997, a considerable increase therefore. Workless households were highlighted as targets for reformed labour market activation policies, once again propagating welfare-to-work as a response to most, if not all, of Beveridge’s five giants. From 2002 onward, the government’s Sure Start service was aimed fundamentally at catalysing the employability of parents on social security benefits; analysing the evidence, lone parents’ employment was 57% in 2007 compared to 45% on 1997.

Inevitably, labour market activation training programmes have been an extensive measure of liberal welfare states under both domestic and international governments. Continuing with the example of the UK with its ‘prototypical liberal welfare’ structure, the New Deal for Lone Parents introduced in 1998 – arguably a golden year for liberal welfare reform – was aimed specifically at providing information, advice and training. The pertinent trend to examine here is the introduction of compulsory elements within the scheme from 2008 onward; lone parents on benefits were required to look for employment as soon as their child reached 12 years of age, decreasing to 7 years of age from 2010. This is an indisputable emphasis on labour market activation within the liberal welfare state. In conjunction with these thematic developments, the UK liberal welfare state continued to promote – albeit inexplicitly – the concept of the ‘deserving and underserving’ poor. In fact, it could be argued that New Labour merely extended the logic of the 1834 New Poor Law. Unavoidably, this attracts criticism from those opposed to such policy experiments.

A noteworthy social policy feature is the strong trend towards benefit homogenization within the liberal welfare state that has sought to further the goal of labour market activation for the unemployed. The salience of means-tested benefits has become clear since the 1980s; the underlying logic of such reform has been to integrate, as far as possible, all working-age benefit applicants into the labour market. Likewise linked inextricably to liberal governments’ encouragement of labour market activation was the design of the compulsory ‘restart’ interviews targeted at claimants who had been out of work for 6 months or longer, introduced in 1986 (Finn et al., 2005:5). Under the Job Seeker’s Allowance benefit, linked to the ‘restart’ programme, the very definition of ‘actively seeking work’ was reconsidered for the initiative; regular and compulsory interviews were brought in (Clasen, 2009a: 76).

Much of New Labour’s New Deal shifted the onus of responsibility from Jobcentre Plus to public, voluntary, or private providers which were paid by results and given bonuses. Most recently, as part of a benefit retrenchment initiative in response to public deficit, the coalition government of 2010 revealed that receipt of Employment Support Allowance for those ‘capable of working’ would be restricted to one year, after which recipients would be referred to the lower Job Seeker’s Allowance. Linked to this was the divisive introduction of Universal Credit in November of 2010 (DWP, 2010). An integration of benefit schemes and tax credits was the overarching aim. In fact, the purported overreliance on tax credits was perceived as a major problem for the coalition government, illuminating their activation policies; the idea of social insurance, especially unemployment insurance, constituted a ‘weak citizenship model’ (Crouch, 1999). In stark contrast to Nordic welfare models, benefits in the UK have always been, to some extent, related to earnings. In this vein, the label of ‘the most lightly regulated labour market of any leading economy of the world’ (Cm 3968, 1998) was a prized accolade of the liberal Blairite and Brownite welfare logic.

In an understanding of policy intricacies, one cannot allow the macroeconomics of government spending to pass unexamined; non-inflationary employment growth was a central and explicit mission of the mid-1990s government in the UK, raising the number of employable social security claimants in an attempt to increase competition for jobs and improve the state of the public purse. In this regard, political credit claiming as part of future office tenure and positive public perception has been an equally important goal of liberal welfare reform in activation for the unemployed. Post-1997, there was a remarkable increase in the number of those who perceived unemployed persons as too passive and benefits as overly generous (Hills, 2004). The gradual increase in employment and decrease in unemployment since the mid-1990s created a felicitous policy backdrop for an increasingly activation-oriented unemployment paradigm (Clasen, 2000).

Conclusively, the analysis has enabled us to understand the methods of liberal welfare states, predominantly within the historic trajectory of British social policies since the late 20th century. The continually probing nature of the social policy debate in relation to activating the unemployed comes from its contentious and controversial aspects; the ideology of liberal welfare states in their reliance on market dynamics and employment structures to respond to a population’s welfare needs is inevitably susceptible to critique and division within and outside of the policy narrative.

The important question of whether or not liberal welfare states have actually benefited the unemployed is complex and unanswerable in the fairly limited constraints of our present analysis; however, the fundamental aim of this discourse was to decipher how, in a policy and ideology context, liberal welfare states do activate the unemployed. This considered, the literature and policy assessed has revealed that the methods by which employment activation is executed revolve around four core trends; firstly, the introduction of conditionality and obligation in the context of social security. Secondly, the increased homogenisation of benefits and social assistance schemes, such as is the case with Universal Credit, thus framing social insurance as inimical to positive citizenship. Thirdly, the reformulation of family and children in terms of working life, introducing greater choice and flexibility tied to employment rewards. Lastly, the political point-scoring macroeconomic initiatives geared towards cutting expenditure and creating conditions of efficiency, growth and productivity. Almost every aspect of the liberal welfare state in relation to unemployment has, at its core, the essential belief that participation in the labour market is genuinely the greatest solution we have to the perpetual giants of idleness, want, squalor, disease and ignorance.