Why pushing people into any job risks undermining the UK’s ambition for high employment

Today marks the publication of the Keep Britain Working review, which has been tasked with identifying how employers and the government can raise employment participation by improving the way employers support people to stay in work. This is a welcome review, with high ambitions. Its goal of an 80% employment rate is something only three advanced economies have achieved.

This is not the first time we have seen lofty employment targets: the coalition government first stated they wanted the highest employment rate in the G7; later that they wanted to achieve ​“full employment.” Other than improvements in the National Living Wage, UK labour market policy over the past decade-and-a-half has been almost exclusively focused on trying to raise employment participation.

A key tool previous governments used to try to achieve this was increased benefit conditionality, which places demands on claimants to prove they are looking for work for 35 hours a week under threat of sanction (removing their welfare benefits). The past decade has also seen an unprecedented extension of conditionality to those already in paid work with low earnings – a big shift to how these workers were treated under the New Labour years when they were on working tax credit.

This was also argued to be beneficial to the claimant, leading naturally to improvements in job quality and job security over time. Getting claimants into ​“Any job” first was assumed to eventually lead to a ​“Better job” and then a ​“Career” – known as the ​“ABC” approach.

A key question the current government faces is whether it sticks with this current system of welfare design or embarks on a more radical departure from the status quo they inherited. Whilst it has signalled a shift away from the ​“ABC approach”, this has yet to be translated into concrete policy changes – with debates over PIP suggesting further welfare retrenchment and conditionality may be on the horizon.

The current approach to conditionality may be counterproductive if it ends up pushing people into low-quality jobs, which is detrimental for the claimant and may be counterproductive given low-quality jobs limit career progression and increase the likelihood of returning to benefits. This could create a cycle of job insecurity – undermining the government’s wider economic ambitions on productivity growth and regional economic development.

Figure 1: Strictness of job search requirements by OECD Country

Notes: strictness of job search requirements is based on a combination of both the frequency of job search monitoring and the documentation required to prove job search activities.
Source: Activity-related eligibility conditions for receiving unemployment benefits (OECD 2022)

Seen in the international context (Figure 1), the UK’s welfare system has long been one of the most conditional amongst advanced economies, so it stands to reason that extending conditionality further has not achieved the effects so desired by previous governments.

The Mayfield Review has set out important ambitions to improve the way employers engage with workers in ill health to prevent people from falling out of work. But to achieve its goals, it is essential to link-in with the way the welfare system operates. We need to rigorously assess the types of jobs people on universal credit are being pushed into to ensure the system is not merely reinforcing cycles of low pay and poor progression.

To do this, we have conducted some of the first empirical analysis of the job quality of workers on universal credit, using two representative surveys (Understanding Society; and the Wealth and Assets Survey). We compare those working while claiming universal credit with a range of comparators. Figure 2 compares universal credit recipients in work with low-income non-claimants earning below 60% of the median hourly wage – similar to the government’s definition of ​‘low pay’ in the Keep Britain Working review. The latter offers a fairer comparison than comparing to the general population, as both groups should share similar profiles and face similar employment barriers.

Nearly 40% of those working while claiming universal credit work in routine occupations — marked by repetitive tasks, low autonomy, and little opportunity for progression. Among low-income non-claimants, this figure falls to around one-quarter. Low-income workers not claiming universal credit are more likely to hold lower managerial roles, with roughly double the proportion compared to universal credit claimants. These differences reveal that universal credit claimants are systematically concentrated in different occupations, often with markedly different progression prospects – making it difficult for them to achieve the ​‘Better job’ and ​‘Career’ in the ​‘ABC.’

Figure 2: Occupational distribution: people working on universal credit vs non universal credit low-income

Notes: excluding Semi-Routine and lower Supervisory occupations which have similar proportions of people working in those roles for both groups
Source: NEF analysis of the UK Wealth and Assets Survey (ONS 2022)

To capture these inequalities more fully, job quality was assessed across several dimensions. Across pay, job security, autonomy, and career prospects, universal credit claimants scored consistently lower than the rest of the workforce. Their jobs are less secure, less empowering, and less likely to offer progression (Figure 3).

We also found that those in the most conditional universal credit group (those earning below the so-called ​‘Administrative Earnings Threshold’, and without any mitigating circumstances such as disabilities) work in jobs with significantly worse progression prospects and employee-oriented flexible working opportunities than workers with similar earnings (see Table 1). This suggests that many of the recommendations of the Mayfield Review may not impact these workers, since they often do not work in a standard employment relationship.

It is heavily focused on workers in standard employment relationships — often with large employers. Our data shows this doesn’t reflect the reality of the labour market for people on Universal Credit, many of whom lack the supervision and employer support mechanisms available to keep them in work. The welfare system currently doesn’t have the mechanisms in place to support these workers to thrive and grow in the labour market.

Figure 3: Radar plot of job quality (range of measures) for those claiming and not claiming universal credit

Source: NEF Analysis of Understanding Society.

We have also found some evidence that the experience of universal credit has significant implications for subjective wellbeing. Life satisfaction scores show that non-claimants tend to report higher subjective wellbeing, with many scoring seven or eight out of ten (Figure 4). Universal credit claimants, by contrast, cluster around middling or low satisfaction levels, often five or below. This disparity raises concerns about the real-life impact of the system on claimants. Previous NEF research supports this, showing that nearly two-thirds of claimants say sanctions harm their mental health, rising to almost three-quarters among those with health conditions. For many, the types of work universal credit pushes people into brings not fulfilment but stress, insecurity, and exhaustion. 

Figure 4: Life Satisfaction for people working on universal credit and low-income people working not on universal credit

Source: NEF analysis of the UK Wealth and Assets Survey (ONS 2022)  

Low life satisfaction carries further costs. Studies show it predicts poorer physical health and higher rates of hospitalisation for preventable conditions. This creates a cycle: worsening health leads to reduced hours, job loss, or long-term benefit dependence, undermining the very purpose of universal credit’s work-first model.

To realise the ambitions of the Mayfield Review, the Government needs to rethink how the current welfare system operates. The current focus on pushing people into ​‘Any Job’, without a drive to improve quality and career prospects, risks undermining the very goals of the review.

An alternative approach is to support people into work that suits their skills, background and interests. By taking a more active role in helping people into work, we will be better able to match claimants to the right job, leading to better quality work. We can learn from our recent Test and Learn pilot with Camden Council, which evaluated a different voluntary employment support scheme for people with disabilities on out of work benefits, which found strong engagement, with 90% support calls leading to a referral to an onward service like an employment support service.

In a forthcoming report, we will provide further analysis suggesting that the extent and foregrounding of conditionality — carried over from past administrations — threatens to undermine the government’s goal to create ​“good jobs in every part of the country.” By pushing people into very low-quality work, the current welfare system risks trapping workers in the same cycle of insecurity and poor job quality it was meant to end.

Supplementary data and methods

Our analysis uses people reporting claiming universal credit in two representative surveys (Understanding Society and the Wealth and Assets Survey). For one of these (Understanding Society), our analysis is able to estimate the conditionality groups universal credit recpients are in, using data on their family earnings, and information on their family circumstances (e.g. youngest children) and any disabilities or health issues they have.

To analyse the job quality of Universal Credit recipients, we used an existing index of multidimensional job quality developed using the same survey. This index contains 7 dimensions, made up of 15 indicators:

• Earnings: Comprising two indicators: one on workers’ position in the hourly wage distribution; and another on the sufficiency of earnings to meet Minimum Income Standards.

• Insurance: Whether contributes to employer or (if self-employed) personal pension.

• Security: Length of continuous service in job; and perceived job security /​chances of losing job in next 12 months.

• Autonomy & Voice: Autonomy over nature, pace and manner of day-to-day work; and.

• Work-life Balance: Number of employee-oriented flexible working opportunities; and whether works above average FT worker hours or, worse, above UK Working Time Directive.

• Prospects: Perceived short-term training and promotion prospects (<12 months), long-term occupational growth to 2035 by highest qualification and managerial duties in job.

• Health & Safety: Rate of workplace fatalities, accidents and injuries per 100,000 by industry.

Table 1 provides indicator-level data of the proportion of Universal Credit recipients in the most conditional group with workers not on Universal Credit but with similar earnings. Our forthcoming report will present further analysis of the job quality and wider circumstances of these workers, as well as detailed local labour market analysis.

Table 1..3. Proportion all Universal Credit claimants in-work earning below the Administrative Earnings Threshold (AET) scoring worst on each QoW indicator, versus rest of workforce earning below AET. Uses family (benefit unit) level earnings for couples/co-habitees, and accounts for changes in the AET over time in legislation, based on the date of interview.