Wednesday 22 November 2017

Thousands better off on the dole than in job, says ESRI

Charlie Weston Personal Finance Editor

THOUSANDS of families would be better off on the dole than working, a controversial report from a State-funded think tank has found.

The report, from the Economic and Social Research Institute (ESRI), concluded that once the costs of transport to work, lunches and other expenses are factored in, it costs parents almost €10,000 a year just to get themselves to work.

Working people incur five times the expense of someone who is unemployed, the study found.

The report, which is set to re-ignite the debate about the generosity of our welfare system, found that work-related expenses are so high that four out of 10 working families would be better off on welfare.

Parents who leave the house to go to work have to cover the cost of transport, lunches, childcare and clothing. This is not factored in when comparing the income from work with what a family can get on social welfare benefits, the report states.

It costs a worker €7,000 a year if there are no children in the house, to cover expenses like lunches and commuting.

This rises to close to €10,000 for those with one child under five.

Childcare costs in Ireland are among the highest in the world, and can eat up around 30pc of monthly incomes.

Co-author of the report, Richard Tol, said the figures blew away arguments made by Social Protection Minister Joan Burton that the majority of people were better off in work.

"Joan Burton and her department work under the assumption that, for the vast majority of people, it is better to work -- you come out with a higher net income. That is not true, if you believe our numbers."

The report concludes: "A comparison of take-home pay plus extra expenditures shows that 15pc of people without children, and 44pc of people with children, are better off not working."

There were 429,255 people on the Live Register in May.

The report's findings, if proven to be correct, will make it more difficult to tackle the jobless crisis. This is because it will reinforce the unemployment trap -- which means people will be reluctant to take up jobs even if they become available.

However, the report notes that even if they are better off on the dole, many people will still choose to work as it increases their self-esteem.

But the massive expenditure of turning up for work every week shows the strain families are under, especially as there have been five austerity Budgets since 2008.

Families have been hit with higher income tax, the universal social charge and the household charge.

Households have also been hit by the loss of dental benefits, the removal of mortgage interest relief for all except new buyers, changes to state drugs support schemes, carbon tax hikes, rail fare rises, and levies on general insurance and health insurance.

Costs

The ESRI report shows that it is costing an average of €106 a week in commuting costs alone.

Other costs include €49 a week on food for those who work and €14 a week on childcare (based on an average including informal carers such as grandparents) along with €36 on clothing.

For a family with a child, all of the different work expenses amount to €227 a week. This is €185 more a week than someone who is unemployed would have to pay out.

Over a full year, this works out at a cost of €9,664 in work-related expenses. Those who are on the dole have expenses but they are lower.

The Department of Social Protection said the majority of people on the Live Register would be better off in work.

It produced figures arguing that families who earn more than €28,000 would be at least €6,000 better off in employment than being on the dole.

The department insisted that those in employment, who are on low to middle incomes, can get additional welfare benefits to boost their incomes.

However, the department's figures do not take account of the costs of going to work.

Brid O'Brien of the Irish National Organisation for the Unemployed said the majority of those on the dole were single people with no children.

Irish Independent

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