EC criticises Croke Park deal and welfare system
THE European Commission took aim at the Croke Park agreement and Ireland's generous welfare system as it okayed the payment of €2.3bn in the next instalment of our bailout.
While there have been some reductions in welfare payment, "some further calibration of benefits by either age or duration of unemployment might have to be considered," the Commission said in its latest report on Ireland's compliance with the agreement governing the the December 2010 bailout.
The threat to dole payments comes as the Government considers a report by the Department of Social Protection which looks at possible ways of scrapping poverty traps and ensuring that welfare payments are targeted at the poor.
The Commission's sixth quarterly report said the Government must take action to prevent the number of people who are unemployed for more than a year rising above the present 60pc level.
While the number of short-term unemployed is slowly reverting to the pre-crisis norms, the number of long-term unemployed is rising steadily.
"The numbers have increased sharply also due to Ireland's traditionally weak job-search conditionality regime and essentially unlimited duration of unemployment assistance," the Commission's report says. "Growing long-term unemployment has a considerable fiscal cost due to the fact that benefits in Ireland (amounting to about €815 per month, and means-tested after a year) do not decline over time."
Most countries in Europe insist that unemployed people attend regular meetings with case officers to discuss job searches.
Payments also taper off if people fail to find work. The troika has repeatedly criticised the Government's failure to provide relevant training or force those looking for work to attend interviews. Turning to the Croke Park agreement, the Commission repeated troika concerns about the Government's decision to reduce the number of public sector workers rather than their salaries.
Wages in the public sector are "at high levels by international comparison", the Commission notes.
It also takes the Government to task for failing to reform public sector pensions to reduce the cost of new civil servants.
The Government has plans to introduce a smaller pension for new entrants to the public sector but has not yet passed the legislation necessary to lower pensions.
New legislation "should be secured as a matter of priority", it added.
The troika stressed once again that the Croke Park deal "should be kept under review, and that should the desired savings not materialise it would be prudent to consider taking additional measures (eg revisions to some pay scales and savings in some non-core pay and allowances", the report adds.
Turning to the Government's stalled privatisation plans, the Commission says that the State must publish a detailed list of "regulatory, legislative, corporate governance and financial reforms" to allow the asset sale programme to proceed.
It must also use at least half the money raised from sales to pay off debt.
Publication of the report clears the way for payments of €2.3bn from Europe as well as an additional €500m from other bailout partners. This brings the total lent to Ireland by European countries so far to €34.9bn.