Workers over 50 forced into lower-paid work after losing their jobs would receive an earnings top-up worth £200 a week under a national wage plan proposed by the Labour MP Frank Field.
The longstanding campaigner for welfare reform said employees aged between 50 and 64 should be eligible for government financial support worth £10,000 a year for two years provided they had a track record of paying their national insurance contributions. He said his idea would help counter higher rates of unemployment among the over-50s and would be politically popular because the public would see that they could benefit from their NICs.
“We need to rebuild support for the welfare state,” Field said. “That can be done by showing people that if they pay money in, they get something out.”
He added that he had singled out the 50–64 age group because they were particularly hard hit by unemployment. Almost half of the jobless among them have been out of work for six months or more, compared with a third of those aged 16 to 24.
Field said one explanation for more entrenched spells of unemployment among older workers was the desire of those in their 50s and early 60s to seek work that required similar skills and offered comparable wages to their old jobs. Workers in this age group were also reluctant to take a much lower-paid job that required different skills and which they might leave after a short period.
The solution, Field said, would be a payment to workers who, having held a job for a certain number of years, took up new employment on significantly lower wages.
“This payment could compensate each worker for up to half the difference between their previous and current earnings,” Field said in a letter to the outgoing secretary of state for work and pensions, Ian Duncan Smith, shortly before his resignation last month. “The programme’s main advantage to the worker would be to cushion any immediate financial losses resulting from their labour market transition, as well as to smooth their lifetime earnings.”
The Labour MP said he was still waiting for Stephen Crabb, Duncan Smith’s successor, to respond to the plan, but added: “It is a good idea. The cost of the scheme would be quite small because only a small number of people would be covered by it.”
He said the government could also use the scheme to provide an incentive for a more rapid return to work, with payments available only in the first 24 months after a worker lost their job and activated only when they had found new employment.
“If it were coupled with the government’s in-work progression agenda, perhaps by encouraging employers to offer intensive on-the-job training to their new recruits who are covered by the programme, national wage insurance could also provide the motivation for workers to establish themselves in a completely different field from the one to which they have become accustomed.”