Report Finds Employment Inequalities After “Time Out” Penalty

Resolution Foundation, an independent think tank, has produced a report that highlights differences in employment prospects between disabled people and non-disabled people who have been unemployed for over a year. The publication finds that the odds of a disabled person returning to work after this period of time are reduced at twice the rate of non-disabled person. This information comes ahead of the Government’s Green Paper on improving disability employment.

Time spent out of work is a key factor of the chances of getting another job for all groups – but it is particularly crucial for those with disabilities. The analysis shows that 16 per cent of disabled people who have had a job within the past year re-enter work each quarter. This falls to just 2.4 per cent for those who left a job more than a year ago, meaning the chance of re-entering after a year out is 6.5 times lower than in the first year of unemployment.

Importantly, this ‘time out’ penalty is more than twice the size of that for non-disabled people, who are only three times less likely to re-enter employment after a year out of work than in the first year after exiting.

The report argues that the current policy focus on disabled people on benefits is therefore seriously misguided. Being assessed for disability benefits after leaving employment can take between nine months and one year: six months in receipt of Statutory Sick Pay followed by at least three months spent waiting for an assessment after making an Employment and Support Allowance claim. By this point, the odds of re-entering work have fallen considerably.

The Government has made clear its commitment to improving employment outcomes for disabled people. This includes real-terms spending increases in this parliament, and a much more health-focused back-to-work programme – the Work and Health Programme – to replace the Work Programme next year.

However, the Resolution Foundation estimates that under current plans even a high-performing Work and Health Programme would only support 20,000 disabled people per year into work. This approach alone will make very little dent in the Government’s ambition to halve the disability employment gap, which the Foundation estimates will require a 1.5 million increase in the number of disabled people in work by 2020.

The report calls for the forthcoming Green Paper on disability employment – due to be published later this year – to consider a radical new ‘damage prevention’ approach to bring support to people with disabilities not when they are on benefits but before they exit the labour market and during periods of sickness absence.

The Foundation proposes that the Government sets a target to reduce the number of disabled people leaving employment, to sit alongside the ambition to halve the disability employment gap. To meet that target the Foundation calls for a major focus on retaining links between a firm and an employee. That should include the introduction of a statutory ‘right to return’ period of one year from the start of sickness absence, and a government rebate on Statutory Sick Pay costs for firms who support employees to make a successful return during this period.

In addition, the Foundation highlights the potential of the new Fit for Work service, an occupational health and rehabilitation service for employees on sick leave introduced by the Government last year. However, it is concerned that restricted entry routes and low referrals are hampering its chances of success. The Foundation therefore recommends that the service is opened up to the self-employed; that employees are allowed to initiate engagement (rather than just GPs and employers); and that incentives for both firms and employees to engage with Fit for Work are introduced.

The Foundation also suggests that the Access to Work programme – which provides grants to workers with health problems and disabilities and is widely regarded as a success – is expanded. 

Laura Gardiner, Senior Policy Analyst at the Resolution Foundation, said: “Helping people with health problems or a disability to enter and remain in work is a major concern in an ageing society, and the key challenge to overcome if we are to achieve the Chancellor’s goal of full employment.

“The current focus on supporting people after they have been assessed for benefits is misguided, with help arriving too late and on too small a scale for the millions of people who need it.

“A ‘prevention is better than cure’ approach that improves support and incentives in the workplace and during periods of sickness absence should be at the centre of the Government’s forthcoming Green Paper on boosting disability employment. Such an approach would mean fewer workers have to experience the stress of being out of work, employers see a reduction in their staff turnover and the Government can make faster progress in its laudable ambition to halve the disability employment gap.”