Getting a job pays more than staying on welfare for the vast majority of people, according to a new study by the Economic and Social Research Institute (ESRI). The study was presented at the ESRI "Budget Perspectives 2015" conference on Wednesday (11th June). 

Welfare Targeting and Work Incentives says that that work pays more than welfare for close to six out of seven unemployed people – even when in-work costs like childcare and travel to work are taken into account. The report states that, among those people either in work or unemployed and facing a situation where work pays less than welfare, more than 70% choose work rather than welfare. It states that the reasons for this include:

• Prolonged unemployment tends to reduce future wages
• Employment provides opportunities for wages to grow
• The non-financial benefits to being in work, including social and psychological benefits
• Compliance costs associated with welfare payments – such as requirements to attend training and to search for work – and penalties associated with non-compliance.

The study also states that policy initiatives to improve the reward from work are worthwhile, but will have only a limited impact on overall unemployment. The report says “More substantial reductions in unemployment will require a revival of international and national demand, and activation measures providing skills and training in areas where new jobs will arise.”