Analysis

Saturday 2 August 2014

Aideen Sheehan: Working should pay more than the dole – it's a no-brainer

Published 04/11/2013|02:00

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IT'S a no-brainer that you should always be better off working than on social welfare. While it's vital to have a safety net for families who lose their jobs and need state support till they find a new one, no system should ever be allowed to make it pay more to stay on the dole.

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Yet that's currently the situation in Ireland for many families, an Irish Independent investigation has found.

While the Government bats around statistics saying the vast majority of people are better off working, the Economic and Social Research Institute (ESRI) notes that 8pc of the unemployed would lose money by getting a job, meaning the reality is that thousands of households are disincentivised to work.

For many people, a job on the minimum wage is likely to be the only work option open to them, particularly if they've been out of the workforce long term, but it shouldn't cost them money.

Family income supplement is a good way of bridging part of the gap between welfare and work by providing households on low incomes with vital top-ups to make it worth their while to get up each morning and go to work.

But rent supplement remains a huge barrier, as there are currently over 82,000 households getting these payments worth up to €10,000 a year to subsidise their accommodation costs.

The difficulty with rent supplement is that it's essentially a subsidy given to social welfare recipients who can't meet their rental costs – and the department concedes it's generally not available to people working.

The Government is now belatedly moving to close off this welfare trap by making housing payments a more seamless affair based on financial need, rather than welfare status. But as it starts shutting one welfare trap, it could be opening another with its budget decision to remove medical cards from households who move from welfare into work, who until now have been allowed to hold onto them for three years.

There's no doubt that any job, no matter how low paid, can be the first step towards improving your family fortunes – but humans are rational and our system must make that first step pay or risk leaving too many people behind.

Irish Independent

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