I think you're basically right; it's already happening on a large scale with lower skilled jobs. Over the last few years lots of employers have switched to hiring people on short-term contracts and getting rid of them before they become entitled to redundancy pay.

About two years ago the benefits system was struggling to cope with this. A person would be claiming JSA, get a job and stop claiming, then get let go after a few months and replaced with another cheap unemployed person. They would then have to make a new JSA claim. I think the result was an increased load in new benefits claims and delays in processing them.

This way of conducting business is pretty bad imo - it just screws poor people. But there are some good things happening too - especially with trying to lower the cost of public sector employees (see the example on TV yesterday of forcefully retiring police officers with 30+ years service to reduce high salaries and pension contributions).