Sunday 15 September 2019

Brendan Keenan: Cuts fury distracts from welfare system overhaul

Brendan Keenan

Brendan Keenan

Helping the hidden workless would have no electoral benefit for TDs but nevertheless we must keep trying

IT should have been a happy coincidence. The report, Work and Poverty in Ireland, from the ESRI (Economic and Social Research Institute) appeared just as the debate was raging on the social welfare cuts, especially the reduction in the respite grant for carers.

Actually, it was almost exclusively on the reduction in the respite grants. Such is the nature of our politics. That nature is becoming ever more of a threat to all our futures, exemplified by the fact that the ESRI report, while it got extensive coverage, never managed to feature in the fierce political debate.

Nor, until Colm Keaveney left the tent, did the rest of the Social Protection package – which, at €450m in a full year, is almost 20 times the size of the respite cut.

It would take a wiser political head than mine to say whether the Government was glad, or sorry, about this near-total concentration on one issue among so many. Mr Keaveney latched on to the big money, which just like last year, came not from carers but from children. The €10 monthly reduction will be worth more than €140m a year.

Not surprisingly, another ESRI analysis found that the Budget is indeed "regressive"; where the loss is greatest to those on lower incomes.

It is a tentative conclusion because lack of data means €600m of indirect and capital taxes are not included. But neither is €180m in other cuts, including, as it happens, the respite grant.

The regressive case is bolstered by the knowledge that child benefit is one of the most effective – perhaps the most effective – way of reducing poverty. Flat rate cuts are bound to hit the less well-off proportionately harder.

The difficult question is whether this regressivity (more popularly known as "unfairness") is inevitable, or perhaps even necessary to some extent.

There is not enough data to answer that question definitively either, although it is clear that the total budgetary stance since 2009 would be much less progressive had it not been for the public sector pay cuts and levies in the early years.

This is where the startling ESRI findings on work and poverty come in. They cannot prove anything on the question, but they are certainly suggestive. The shock finding was that the proportion of Irish households without an adult working, at more than one in five, is double the EU average.

As well as a shock, this was a disappointment. During the boom, as unemployment fell to four per cent, there was much cheering talk of jobs coming to areas and families where hardly anyone has been employed for generations.

No doubt there was truth in that, but it appears that it did not go as far as one would have hoped. These hidden workless, only a third of whom would describe themselves as unemployed, remained stubbornly resistant to rising tides – and now the tide has ebbed dramatically, increasing their number by 30 per cent.

Tackling this requires changes to both the circumstances of those involved, as well as to the welfare system itself. Over half of those living in jobless households were either children or adults with a disability.

The importance of supports such as benefit for children is clear. Less clear is the consequences of these supports on such households and on their prospects. There is also evidence – hardly ever mentioned – that welfare systems here and in Britain have redefined disability to disguise persistent joblessness, while not doing enough to help those who have a disability enter the jobs market.

These things are never simple – but don't try listening to Dail debates if you're looking for any evidence of that. One of the problems in Italy and Spain, where many jobs are protected by law, is that they are often the only jobs in a household. Those protections are supposed to be dismantled. Without them, these countries might throw up similar statistics.

On the other side, but interacting with the welfare system, is the failure to reduce the numbers in this "underclass" with little or no educational qualifications or skills. Several brave attempts have been made down the years, but we must go on trying.

That could mean diverting resources from politically popular causes to these invisible ones with no electoral benefits for TDs.

The ESRI notes that, as well as the traditional strategies on job search and improving qualifications and skills, the rate at which social welfare and in-kind benefits are withdrawn as someone begins to work needs to be carefully planned to avoid causing more in-work poverty.

It is a fact that even if there were no public finance crisis, welfare changes such as some of those we have seen would be needed to mirror the dramatic changes in the world of work caused by the recession.

Under the usual promptings from the troika, Social Protection is engaged on a major analysis of the welfare system, with the results scheduled for March. Not before time.

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