Social benefits turned out to be a profitable business

The welfare state is often criticized today. Spending significant amounts of money on welfare benefits—benefits for non-working citizens—looks exorbitant. It is believed that this leads to an excessive burden on the working population, to irrational spending of budget funds, and the emergence of entire social groups of dependents who sit on the neck of the state for generations and lose all skills for work.

However, recent work by scientists from the UK's Center for Labor and Social Policy Research (CLaSS) calls these arguments into question. The authors called it “Debunking myths about welfare”, coming to the conclusion that a social state that practices mass distribution of social benefits is sure to win.

Perhaps the main myth about the social state: “Benefits educate generations of unemployed citizens” has not been confirmed. According to the Labor Force Survey, families in which at least two generations are completely “on welfare” account for no more than 0.3% of their total number. Moreover, in most cases these are families in which the child only completed education no more than 5 years ago and has not yet found a suitable place. Indeed, children of unemployed fathers have a greater chance of being unemployed, but this dependence is found only for areas experiencing a shortage of jobs. So the new unemployed generation is the result of labor market shortcomings rather than the loss of the “skill to work.”

Closely related to this is another common belief that most benefit recipients continue to receive them for years. In reality (according to Jobseeker Allowance statistics), less than half of people stay on welfare for longer than 13 weeks, and less than 10% stay longer than a year. The statement that “receiving benefits is more profitable than receiving a salary” also turned out to be a myth. Regardless of whether an adult receives payments only for himself or for his children, a 30-hour work week will be 30-66% more profitable for him than idleness on welfare. It is not surprising that, contrary to popular belief, the number of people receiving benefits in the UK is falling from year to year: if in 1995 they made up 17% of the population aged 16-64, then in 2008 it was already 11%.

Another myth is the abundance of scammers who dishonestly profit from the benefits system. At first glance, the fraud numbers are large: according to available data, in 2011-2012. The British treasury lost a billion pounds because of them. However, this number turns out to be very insignificant compared to losses from fraud associated with other areas of the economy. For example, due to the use of illegal tax evasion schemes, about 70 billion pounds were “lost” during the same time. The number of fraudulent requests for benefits does not exceed a few percent. In addition, among social contributions from the British budget, benefits do not occupy a leading place - 53% of these amounts go to old-age pensions.

There is also an argument that welfare benefits given to everyone rather than to some needy groups are wasteful and ineffective. However, citing several studies, the authors of the new paper show that the "universality" of benefits allows their recipients to avoid social stigma, develop a strong label of "retired person" and make it easier to return to normal work. And states in which benefits are truly available to wide categories of citizens occupy the top positions in the rankings of both social and economic development.

Anatoly Vishnevsky, director of the Institute of Demography of the National Research University Higher School of Economics:

“The clichés that exist in the public consciousness are almost always wrong: no matter what you research, everything will not turn out to be as it seems. Unfortunately, these clichés are exclusively actively used in politics.

In fact, how many people are there in reality who are not ready to work at all? The overwhelming majority want to work, realize themselves, and earn money. How many migrants who come to us are really not ready to learn Russian and get an education? Research shows that there are practically no such people. I think we should trust research and not myths that exist only in the public consciousness - but not in reality. The phenomena of life, even those that are familiar and obvious at first glance, should not be judged without special study. And studying this often gives unexpected results.

This, by the way, is the problem of our country - the same Duma makes many decisions without an expert study of the problem. Some people imagined something, others think so - perhaps they are simply afraid to turn to specialists, because the study will certainly show that their ideas do not correspond to reality."