The other side of the coin is what do you do when there actually aren't jobs available in the region and there are too many people to effectively set up in self-employment? Making people jump through hoops and then frowning at their failings is fine when isolated to an individual, but at a demographic level it breaks down.
I recently spend five months out of work and unable to find a job and received welfare. I saw others like me playing the system. I saw others like me struggling to satisfy the system and more, applying for everything and getting rejections similarly. The system doesn't differentiate between the two.
To some degree it's the old 'where do you draw the line' - do you prefer to see the innocent suffer or the guilty go free?