Tougher benefit rules have boosted employment in the UK in the past 25 years but only at the expense of trapping workers in dead-end jobs, according to the leading thinktank, the Institute for Fiscal Studies (IFS).
It said successive waves of welfare changes since the late 1990s had imposed more stringent conditions on those claiming jobless benefits and increased the incentives to find a job. Yet its research also found that many of the jobs found were part-time, low paid and had scant chance of career progression.
Those encouraged to enter paid work had tended to remain on low pay, were paying little in tax and were often still entitled to in-work benefits.
Tom Waters, a senior research economist at the IFS, said: “We spend more than £100bn each year on working-age benefits. About half of it now goes to families in work. This reflects changes in the underlying nature of low income in the UK, to which the benefits system naturally responds: we have high employment and chronic low earnings growth, meaning that an increasing share of the lowest-income families contain someone in paid work."
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