Mike the Psych's Blog

What if psychologists ruled the world? In real life?

Getting richer on the backs of the unemployed

1 Comment

Screen shot 2012-03-18 at 11.28.12


It’s been bugging me for a while now. Before Xmas I tweeted about unpaid interns and asked if it was even legal.

In January I was tweeting again, this time about the allegation that MacDonald’s had been using government money intended to create apprenticeships to subsidise their own training.

And earlier this month I was tweeting again about how it seemed a bit off that Emma Harrison of A4E was making millions out of unemployed people and wondered why the government wasn’t doing it themselves through Job Centres and Careers Services.

I was thinking I should post a blog but never got round to it. And then last weekend Janice Turner summed it all up beautifully in a piece in the Times “workfare is unfair ….

She’d picked up on the advert that Tesco had placed for a nightshift worker offering no salary just jobseekers’ allowance of £53.00 plus travel expenses, albeit with a promise of a job interview. Tesco blamed the JobCentre plus for getting it wrong by saying it was permanent not work experience.

Turner pointed out that Tesco had already enjoyed almost 170,000 hours of unpaid labour equivalent to over 400 full-time workers. In essence we, the taxpayers, are subsidising free labour for Tesco and other companies using this scheme by reducing their costs and so increasing their profits.  Tesco is enormously profitable, almost £4billion last year, and Poundland is another company using the scheme whose profits went up 34% last year.

Can these companies really not afford to pay the minimum wage? The private sector companies are not even paying back the jobseekers’ allowance. They don’t need to recruit permanent staff if they can have kids free every month and they can cut down on overtime pay, which helps many retail workers who would otherwise receive benefits. As Tesco says “every little helps” – their bottom line!

Tesco aren’t alone in this. MacDonald’s, Primark, Boots, Asda, Topshop, BHS, Matalan etc. Turner has vowed not to spend another penny at these shops until they stop exploiting young people and taking money off the taxpayer. Not every business is doing this. Sainsbury’s and Waterstones have just withdrawn from the scheme and TKMaxx are planning to.

It was probably no surprise that it was reported the same day that Tesco was putting pressure on the government to change the scheme. Evidently it had been inundated with tweets and entries on its Facebook page from angry customers accusing it of profiting from the scheme, which it had. Interestingly it had been reported that Sainsbury’s and Asda were chipping away at Tesco’s profits and Sainsbury’s had already dropped the scheme so maybe there was a bit of reputation management being put into place by worried Tesco executives.

Turner also made the point about unpaid internships restricting access to creative careers – unless you are wealthy. She is not disputing that it is good for long-term unemployed to get work experience. But there are plenty of community projects and charities which would welcome them at a time when government funding is being cut in the public sector (and before 2011 the scheme was restricted to that kind of work).

And the other point she made was about companies using government funding for apprenticeships for their own internal training instead. I’d already mentioned MacDonald’s but apparently Morrisons has been doing the same. Again the taxpayers are helping profitable companies keep down their costs.

A few days later however we have Alice Thomson in the same newspaper defending Tesco and the like saying she thinks unpaid work is OK!  She thinks it’s expensive for companies and they didn’t want to do it and had to be cajoled. No thanks we don’t want free labour! Really?

She claimed it has been a great success with around 40,000 people going through the scheme with almost half coming off benefits and many (short of statistics on that point Alice) getting jobs with their sponsors. She also claimed Tesco has taken on a third of their placements. Thanks to the outcry from the public they have also announced that those still remaining in the scheme will be offered jobs. Shows what public pressure can do if it threatens profits.

She did make a valid point  – that anyone involved in HR or career management will agree with – that having experience of working is vital. But she completely missed the point about the taxpayer subsidising these profitable companies. She also belittled Sainsbury’s and Waterstones by saying they never really signed up for it anyway nationally, but should be made to.

She also reported that the government has announced another £120m of payment by results contracts that will be paying charities and and companies £2,200 for every jobless youth they place in work or education. Which brings me nicely back to A4e which is suddenly under scrutiny with former staff arrested on suspicion of fraud connected with false claims about having got people into jobs. When several members of staff are implicated in this kind of activity it suggests lack of leadership and a culture that allowed sloppy practices to say the least. A former employee claimed that staff were under “relentless pressure”  to place people in jobs and received £50 for each successful placement.

A4e’s CEO says it came to light after an internal investigation and “that kind of illegal activity is completely unacceptable”. It now appears however that the company has been investigated 9 times by the DWP since 2005 and the government has said it will terminate its relationship with A4e if systematic fraud is uncovered. As government funding – £180m in contracts last year – appears to be the its only revenue A4e ,which has paid its Chairman Emma Harrison many millions in dividends, could be in serious trouble.

As a result of all the fuss, calls for all government contracts to be suspended, and David Cameron’s promise to hold a thorough investigation, Emma Harrison has stepped down from her role as Family Champion and adviser to No 10. Some people claimed it was a conflict of interest anyway. Whatever happens it seems Emma will not be (dis)gracing the House of Lords any  time soon.

And let’s hope that the targets for the new scheme are tighter than the previous ones.

It’s morally wrong that businesses should benefit to the extent that they have from the unemployed.


Author: mikethepsych

He says he's a psychologist but aren't we all?

One thought on “Getting richer on the backs of the unemployed

  1. Pingback: David Cameron congratulates Tesco on massive job creation plans « This Day – One Day