Yes, you are clearly missing something. By law, workers must be paid the minimum wage. This 'job', though to all intents and purposes a full-time job, is paid benefits only ie far less than the minimum wage. Plus people are forced to do this work or face losing their benefits. We - the taxpayer - pay these benefits. Thus the worker is being exploited because they are being made to do a full-time job, against their will, for £1 something per hour - with no training involved, or offer of a permanent position, to make it worthwhile in the longer term either. We - the taxpayer - are being ripped off as we are paying for Tesco to take on extra staff. In fact we're probably being doubly ripped off, as these schemes mean Tesco can avoid employing a proper permanent staff member, thus increasing the number of those on the dole who we have to pay for as well, and reducing the overall tax take.
The only winner is Tesco - they get extra free workers, paid for by the taxpayer - thousands of them, apparently. Very handy for Tesco - presumably rather hard on their competition, though as well as the exploited workers and exploited taxpayers.
Is that clear enough for you?