Wednesday 29 March 2017

Cut dole and restore incentive to work, says IBEC

Charlie Weston Personal Finance Editor

AN UNEMPLOYED couple with two children can get up to €34,000 a year from the State, removing any incentive for them to take up low- to medium-paid employment.

Social welfare rates are too high and should be reduced, with the funds saved spent on retraining instead, employers' body IBEC has said.

Director-general Danny McCoy said increases in tax in the most recent Budgets had "widened the welfare trap".

He continued: "Given the lack of employment opportunities in the labour market, it is unlikely that this will impact on the employment rate in the short term, but urgent reform of the welfare system is required to ensure a strong incentive to work exists when the economy starts to recover."

He added that an unemployed couple with two children could receive up to €33,944 a year, or €658.90 a week, in welfare payments.

This includes a jobseeker's allowance of €196 a week, €130 a week qualifying adult allowance and €59 a week for two children.

A jobless family would also qualify for rent supplement, fuel allowance, back-to-school allowance and a medical card.

Mr McCoy added: "The rates are simply too high. . . We are not providing enough longer-term incentives for people to rejoin the labour market."

Incentive

IBEC maintains that a couple with a single gross income of €40,000 would end up with €500 less a year than a couple on social welfare.

The couple would need a gross income of at least €41,000 to provide an incentive to work.

Other costs, such as travel and lunches, mean the couple would need to be earning at least €45,000 to make it worthwhile to take up a job offer.

However, this analysis was rejected by the Irish National Organisation for the Unemployed (INOU).

Brid O'Brien of the INOU said it was wrong to include rent supplement when working out welfare entitlements for an unemployed couple as only a small proportion of the jobless get this benefit.

Ms O'Brien accused IBEC of trying to push wages and welfare rates down. She said it was more likely that a couple on the dole would be getting €20,056 a year, or €385 a week.

"The people who call for cuts in social welfare should try living on these amounts because none of them would survive on it. The people calling for cuts are themselves on significant wages," she said.

She added that cuts in social welfare and wages would also depress consumer spending.

Irish Independent

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