There's a saying in which I believe and attempt to live my life by: Never attribute to malice that which can be adequately explained by stupidity.
With that in mind, let's run a little thought experiment.
You are the manager of a company, and your objective is to maximise the profit for the company.
You employ two people. Let's call them shelf-stackers. For each hour that one of these shelf-stackers works, you earn £9.
You pay each of your shelf-stackers £8 per hour. You therefore earn £2 per hour profit.
Sadly, one of them dies in a tragic accident involving a sewing machine and the collected works of L Ron Hubbard, and you now require a replacement.
Many people apply for this role as there is a shortage of jobs in the current economy, and so there are many applicants for each job. However, there is a new government scheme: For the first five weeks of hiring a new employee who has been unemployed for more than 13 weeks, you can pay them nothing. You may then, if they're suitable, take them on.
Your profit for those five weeks now increases from £80 to £400. That's, ooh, a 500% increase in profit for helping get people off benefits? You win, the person on benefits gets valuable work experience which may help them in the future. What's not to love?
So, assuming your aim is to maximise profit:
If someone dies or leaves and you pay their replacement minimum wage instead of taking a workfare replacement, you are an idiot.
And this is why workfare is evil. Because it makes forcing people to work for you and paying them nothing the sensible thing to do.
You used to have two paid jobs. Now you have one paid, and the other unpaid. The work still gets done, but you aren't actually paying someone to do it any more. Instead, you're taking the money that you would have paid someone with and using it to line your own pockets.
Worse yet: if you are the unscrupulous sort, there's nothing to stop you saying that they weren't suitable for the job, and then taking someone else on under the same scheme. Repeat as necessary.
And it doesn't even work for the country. Instead of two people paying taxes for 52 weeks of the year, the scheme has resulted in the loss of five weeks worth of tax revenue. More, if the turnover in these jobs is high or the management unscrupulous.
So as far as I can see, the introduction of this scheme by the government requires both malice and stupidity.
It doesn't solve the problem of unemployment; it loses the government money; and businesses have an incentive to use it rather than hiring people at a reasonable wage.
The Boycott Workfare site has more information about the companies involved.