Striving for better: Welfare and a labour market that work for disabled people

This is the second in a series of reports by the Social Market Foundation that consider the Government’s ambition of halving the disability employment gap.

Since the first report was written, a new Prime Minister has entered Number 10 and the Ministerial teams at key departments including Work and Pensions, Communities and Local Government and business have changed significantly. However, while much of the context has changed, it is clear that the scale of the ambition that the Government has set itself has not.

Halving the disability employment gap would mean supporting over a million more disabled people into work than is the case today and improving a range of health and disability outcomes. Doing so could present a wide range of benefits to individuals, business and the state, as demonstrated by the costs of disability and worklessness:

  • Around 5.3 million people living in a household with a disabled person live in income poverty and both disabled children and non-disabled children in disabled households can suffer worse long-term outcomes (including education and health) themselves;
  • Over 135 million working days were lost due to sickness absence in the UK in the year to March 2016 and the costs of presenteeism also stand at over £15billion a year; and
  • The cost of income replacement and extra cost benefits for working age disabled people currently stands at around £25 billion a year. Failures to adequately meet the financial and support needs of disabled people also impact on costs in the health and social care systems and more broadly across services provided by local authorities.

The potential range of benefits is large, but achieving these aims would mean fundamentally changing the way the labour market and welfare system work for disabled people and would require a step change in the approach taken over the last 20 years.

The Government now has an ideal opportunity to do just that. With a Green Paper on health and work pencilled in for the Autumn, it can set out a bold new programme of work to ensure that disabled people and those experiencing the onset of a health condition or disability receive better financial and non-financial support.

Rethinking the challenge

To do this, the Government must take greater steps to understand the issue and the wide range of people involved. This report shows that improving outcomes across the disability, health and work agendas is a complex issue. In particular, it shows that it is unhelpful to think of “tackling the disability employment gap” as one distinct challenge.

There are at least three broad types of individuals that might need support if goals to increase employment rates and reduce disadvantage amongst disabled people are to be achieved.

Even within these groups there is, of course, significant variation in the type and severity of condition or disability involved, family circumstances, appropriateness of work and a wide range of other factors. However, this stylistic representation does effectively demonstrate that a one-size-fits-all approach will not be effective and wide scale changes will be needed in a range of different areas of government policy, business practice and society.

Not just disability

It is also apparent that there are much wider issues than disability to consider. For example, the first report in this series demonstrated that out of work disabled people have, on average, far lower qualifications than both the non-disabled population and disabled people who are in work. Analysis in this report shows other factors that play a role, including geography. Figure B demonstrates that disability employment rates vary dramatically across the country.

Areas with the lowest rates of disability employment are also the areas that have the highest incidence of disability. This suggests a range of area-based factors that could play an important role in understanding and improving outcomes for disabled people.

This chimes with previous studies that have shown clustering of disability in deprived and poor areas and areas with a history of industrial decline. Together this all suggests that areas with high rates of disability could be facing other significant disadvantages that might make entry into the labour market more difficult. These will need to be considered closely to ensure an effective policy response.

Work is not always the answer

There are also questions over the extent to which work is the desired outcome for those disabled people not currently in work. Of the three million out of work disabled people in the UK, well over half say that they do not work. Of this group the vast majority say it is because of their illness or disability (77%) and one in five (18%) say that it is because of a caring responsibility.

This demonstrates that increasing employment amongst the group of disabled people that do not want to work will need more than a simple focus on the labour market. For many disabled people, the severity of their health condition or disability will make it extremely unlikely that work is a viable or attractive short (or even long)-term option. For these groups, it should be recognised both that work is not always the appropriate objective to be targeting and that, where this is the case, a different approach to supporting these people, that focuses on improving health and wider outcomes, will need to be adopted.

A change in the labour market needed

Another consideration is whether significantly more people might be helped into work given what is known about the labour market experience of those disabled people who already work. Figure E outlines the characteristics of work for disabled people and non-disabled people already in work. Unsurprisingly, there are some differences. However, perhaps most importantly, many of the differences are not as large as might have been imagined.

The data shows that (on average) those disabled people already in work are not working intermittently or working short hours. However, evidence from existing employment support programmes suggest that short-hours and / or temporary jobs are often the most effective in providing stepping stones into work for more disadvantaged disabled people. This suggests that, if large numbers of more disadvantaged disabled people are to move into work, employers are likely to need to employ a different approach to that which they use with existing employees with disabilities.

Striving for better

Overall this means that, to achieve the Government’s ambitions, large scale changes to the labour market and welfare system will be needed. Importantly, unlike previous attempts at reform, these changes must deliver a welfare system and labour market that are supported by disabled people and the wider public and are affordable over the long-term. To do this, the system must:

  • Provide adequacy: by ensuring that a combination of earnings and benefits provide adequate financial support and dignity for the individuals and families that need to use it;
  • Work for disabled people: This will mean the creation of a system that is adequately personalised and tailored so that it reflects the needs of different disabled people summarised in figure A; and
  • Work for and with employers: by enabling them to fulfil their ambitions for a diverse, flexible and productive workforce.

This report outlines a set of proposals for the short and long term that will help to deliver each of these things. On their own they will not provide the answer and a number of other reports have recently put forward other proposals that warrant consideration. The proposals in this report are also of a scale that will require significant consultation with disabled people and the people and organisations that provide services and support for them and with businesses. However, if taken forward in that context, they would form the basis for a new system that works better for disabled people, society, the state and the economy.

Download The Report: PDF

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