Osborne attacks people in tenuous employment

Life on a zero-hour contract looks set to get much harder.

As George writes, unemployed people were the biggest losers in the spending review. The overall welfare bill is to be capped (although pensions, inevitably, won't be included in that cap), and a new raft of punitive measures have been brought in to make unemployment as painful as possible. In full, they are:

  • introducing upfront work search, requiring all claimants to prepare for work and search for jobs right from the start of their claim;
  • introducing weekly rather than fortnightly visits to Jobcentres for half of all jobseekers;
  • requiring all unemployed claimants, and those earning less than the Government expects them to, to wait seven days before becoming eligible for financial support;
  • requiring all claimants who are subject to conditionality to verify their claim every year;
  • requiring all claimants whose poor spoken English is a barrier to work to improve their English language skills; and
  • requiring lone parents who are not working to prepare for work once the youngest child turns three.

All will make life significantly harder for the groups hit by them. But by far the worst are the first and third policies. All claimants will now need to jump a significant hurdle before they can register for benefits – being asked to write a CV, register with the Government’s new Universal Jobmatch service, and start looking for work on day one, as well as having longer [read: more probing] initial interviews with Jobcentre staff. Then, once the hurdle is jumped, there will be a seven-day wait before any funds are actually transferred, up from the three days required now.

A third of British households have no savings at all. Pushing the wait up to seven days will ruin them – or, more likely, drive them into the arms of payday lenders. Robert Peston called it the Wonga budget, and he's not far wrong.

But there's an even more long-reaching effect of the changes. It's counterintuitive, but they will act as a disincentive to work.

In effect, taking short-term work actively costs £71.70. That's how much JSA you lose in the week after you finish your job; and, of course, that's on top of the fact that you can't claim JSA and work more than 15 hours a week.

Here's how that works in practice: you are unemployed, and have the opportunity of temp work at a local event for a week. It will pay £247.60 at the minimum wage. That's an increase of £175.90 over what you would be getting otherwise. Except now you have to take into account that you'll be losing another £71.70 in the week after the posting is over. Suddenly a week's work provides an actual pay increase of barely £100, and even that's neglecting to cover the costs of actually getting to and from work.

Even worse, the news applies to people getting income support on low-or-zero-hour jobs, as well. So, it appears (and we'll have to wait for the details to come out in the wash to be sure) that if you work the sort of job where you work 20 hours one week and 10 hours the next, you will have the wait a further week to get a top-up. By which time you make have worked another 20 hour week and reset the clock again.

That's where this change will really hit home. We've covered the forward march of zero-hour contracts before, but now life is set to get a lot harder for people signed up to this precarious work.

A bartender pours drinks. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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