Thursday 17 January 2019

Dole is too generous, says top jobs expert

Fewer tempted back to work due to high benefit payouts

Brendan Keenan and Fionnan Sheahan

OUR generous social welfare system is encouraging more people to stay on the dole, a major new report warns.

And our current system risks prolonging high levels of unemployment after economic recovery, a major conference organised by the Government's economic think-tank will hear today.

The small gap between social welfare payments and declining wage levels is cited as the key reason for more people staying longer on the dole.

The warning, which stops short of calling for cuts in welfare benefits, comes as new figures confirmed dole queues have risen to 386,000 -- almost doubling in a year.

It will be outlined to the Economic and Social Research Institute (ESRI) today in a special OECD report on labour policy in Ireland.

Its researcher David Grubb warns that a relatively high proportion of the working-age population is claiming social welfare. Welfare benefits rose rapidly during the boom. Mr Grubb says OECD research shows that, unless other measures are taken, higher benefits increase the rise in unemployment during a downturn.

"As the economy recovers, unemployment falls only slowly and long-term unemployment is more persistent," the research finds.

If benefits are not to be cut, the OECD argues that more needs to be done to assist benefit recipients to secure employment. This could be a version of the Danish model where benefits are cut or removed unless recipients take part in training or accept a job offer.

In its quarterly report this week, the ESRI said that the Live Register numbers could reach 500,000 and that, even when economic recovery begins, unemployment will remain high for years.

Yesterday's figures from the Central Statistics Office showed a continued sharp rise in the Live Register this month, with another 13,000 people losing their jobs and unemployment rising to 11.4pc, up from 11pc in March. Economists said one bright note was that the rate of increase seems to be slowing.

The opposition yesterday accused Taoiseach Brian Cowen of having no plan to protect jobs. Fine Gael finance spokesman Richard Bruton said this month's crisis Budget showed a Government turning to ordinary people to pay for mistakes in policy.

"The central drive of the recent Budget was to heap extra taxes on ordinary workers," he said. "This coming Friday, May 1, which is International Workers Day, will see a single person on the average industrial wage in Ireland pay tax at 51pc. How can the Government think this is a strategy for recovery?"

Labour Party leader Eamon Gilmore said the ESRI report suggested that, by the end of next year, almost one out of five people in the workforce will be out of work.

But Mr Cowen said stabilisation of the public finances through cuts in spending and higher taxes," was the "prerequisite for economic recovery".

Alan Barrett of the ESRI will present evidence to today's conference showing that about half the immigrants who lost their jobs have stayed in Ireland.

Dr Barrett speculates that many will continue to live in Ireland because of the lack of opportunities elsewhere.

"The international experience suggests that immigration is viewed most positively when immigrants are seen as meeting the needs of the labour market. A rising stock of unemployed immigrants might lead to a less favourable attitude," Dr Barrett says.

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