Our welfare system must promote employment as well as providing a safety net
Last year Quartz reported that Amazon were testing a new range of robots which could potentially replace warehouse workers. Over 50,000 people work in Amazon Warehouses in the United States, and around 8,000 people in the UK, and their jobs are threatened by these technological advances.
Technological change is not only affecting jobs in the online tech industry. The service sector over the last few years has been hit hard. Automation has steamed ahead, with self-checkout machines in high street stores and delivery pick-up boxes now a part of daily life.
Automation and technological change have altered the world of work. We are entering a post-industrial age, where well-paid, secure blue collar work is no longer the norm. The next generation will have more insecure, less well-paid jobs with poor prospects for the future.
The changes we have seen in the world of work means we must all fundamentally re-think our approach to welfare. The current model of welfare, which involves a range of schemes from housing benefit to Jobseeker’s Allowance and Working Tax Credits is no longer fit for purpose. These benefit schemes do not encourage people into work; rather, they contribute to a benefit trap.
As earned income rises, out-of-work benefits and in-work benefits are withdrawn, and often the rise in income is not enough to cover expenditure, which can be devastating for some families. What we must do is move forward with reform, building a welfare system which promotes employment and provides a sufficient safety net. A basic income could be the progressive answer.
An unconditional basic income is a non-means tested payment to individuals; a right that comes with citizenship. The model often promoted involves a monthly payment on an individual basis. This income would replace all existing state-provided cash benefits. The basic income would be paid tax-free, without any means testing, and the amount paid would vary with age – but no other conditions or terms would exist.
The basic income is superior to our current model, because it has the potential to reduce poverty and eliminate the unemployment trap created by our existing benefits system. It provides a safety net which adapts to the industrial and economic change currently occurring across Britain. It would also save money, due to the reduction in the amount of bureaucracy needed for the system to work.
The concept of basic income has existed since the late 1940s, and it has support from across the political spectrum. Economists as diverse as Friedrich Hayek to Tony Atkinson have publicly supported the idea. However, we must take into account the potential pitfalls in the implementation of a basic income; what may work in theory may not work perfectly in practice.
A major criticism of a universal basic income is that removing means-testing from our benefits system would be impractical, due to the cost of housing. Without means-testing, a flat-rate component must be in place if universal basic income is to allow people to rent accommodation. This will mean that those without significant housing expenses would gain more from a basic income; and worse still, those renting cheaper housing would receive a windfall gain.
This could also lead to regions like London being out of reach for those who rely heavily on their basic income. A possible solution to this problem would be to reduce the overall amount provided by basic income payments and retaining a housing benefit element in our social security system.
In the current political and economic climate, it is difficult to see a full universal basic income program being implemented. However, this must not stop the Labour Party from continuing to push forward a new vision for welfare. Finland’s Kela (their social insurance institute) have begun preliminary study into exploring ways in which a universal basic income could be implemented.
Here in Britain, we should also be encouraging this form of research. It is of course likely that the results could lead to the formation of a totally new and alternative welfare model to that of basic income. Regardless, we must acknowledge the changing nature of work in Britain – basic income is among a range of alternative approaches we can pursue in building a modern welfare system that works for all.
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