Debt and financial exclusion has a significant impact on jobseeking and there is a real need to integrate welfare to work and financial inclusion activities according to a recent report commissioned by Manchester City Council and produced by the Centre for Responsible Credit.
Based on focus group interviews with unemployed people in Greater Manchester, the research found that a lack of money prevented unemployed people from attending interviews, making phone inquiries about vacancies or travelling to training opportunities, while employers who used credit scoring as part of their recruitment process further limited job opportunities for those in debt.
In some cases, insolvency rules created a financial disincentive to take up work and having debt problems also distracted people from jobseeking, because of the time needed to obtain advice and because some creditors continued to harass for repayments.
The report, 'Out of Work and out of money' calls for a new approach including:
- Introducing a screening process for debt problems within Jobcentre Plus involving rapid referrals to debt advice agencies
- Improving the enforcement of rules designed to prevent the harassment of unemployed debtors
- Creating new partnerships between lenders - such as credit unions - and welfare to work providers to ensure unemployed people have access to affordable credit
- Ensuring those in new jobs have a month's grace period before restarting payments to creditors
The report also wants local authorities and their partners to build actions on debt and money problems into local work and skills plans.
The project also developed a resource guide for welfare to work providers to use to help address some of the barriers, for example by providing information about financial education and how to deal with debt problems.