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George Garvey: ESRI scores own goal as latest paper pulled

The strange case of the withdrawn working paper, which claimed that up to 44pc of unemployed families were better off on the dole, has placed the Government's favourite economic think tank, the ESRI, firmly in the spotlight.

Yesterday is a day that the ESRI won't forget in a hurry. Although the offending working paper had been released on May 22, it wasn't until its findings were reported in yesterday's Irish Independent that controversy erupted.

On the face of it the paper, which was co-authored by Professor Richard Tol, seemed to confirm anecdotal evidence that many of those on the dole would be worse off if they returned to work.

Not so, insisted the Department of Social Protection. It said that the vast majority of those on the Live Register, the number currently stands at almost 437,000, had a financial incentive to return to work, if they could find a job.

Shortly after teatime, in what was by any yardstick an utterly humiliating climb-down, the ESRI issued a statement announcing that it was "withdrawing" the working paper because the underlying analysis required "major revision". In other words, the ESRI seemed to be admitting that it got it wrong.

That is unlikely to be the end of this strange affair. If, as it admits, the analysis underpinning the working paper was flawed, why did it take three weeks from the initial date of publication for the ESRI to spot this? By waiting as long as it did and only withdrawing the working paper after the Department of Social Protection publicly rubbished its main conclusions, the ESRI compounded the damage.

With over half of its funding coming from various state organisations, questions will inevitably be asked about the ESRI's independence in the wake of this debacle.

What is quite remarkable about yesterday's fiasco is that this is not the first time that the ESRI has found itself embroiled in this issue. Last October it published a report which found that only 3pc of the unemployed would not be better off working rather than claiming social welfare.

On the face of it the working paper which caused such controversy yesterday seems to fly in the face of the ESRI's previous report. How could two papers from the ESRI published just seven months apart come to such radically different conclusions?

Professor Tol, who was one of the co-authors of the report withdrawn yesterday, is certainly no stranger to controversy. Last January he announced publicly that he was quitting the ESRI and leaving Ireland. Explaining his decision, Prof Tol, a plain-speaking Dutchman, did nothing to spare the blushes of either the Government or the ESRI.

He claimed that people who worked in the ESRI were discouraged from expressing personal opinions to journalists or on social networking sites such as Twitter. "If you violate policy and upset people you can get into trouble", he was quoted as saying at the time. He then went on to state that the ESRI was "compromised" by the fact that it received such a large proportion of its funding from the State.

Prof Tol was also extremely gloomy about Ireland's future economic prospects saying that: "Ireland is facing 10 years of austerity. Leaving Ireland is the best thing you can do at the moment if you are responsible for a young family".

Which is not what the Government wants to hear about the outlook for the Irish economy.

While the fact that Prof Tol was one of the co-authors of the withdrawn working paper may be no more than an unfortunate coincidence, the whole sorry episode inevitably raises questions about the ESRI's independence.

Ever since it was first founded over 50 years ago the ESRI has had to tread a fine line between maintaining its independence and not unnecessarily antagonising the government upon which it relies for most of its funding.

Criticism of the ESRI has been mounting ever since -- in common, it must be said, with most of the economics profession -- it failed to predict the economic and banking collapse of recent years. Was the ESRI, not unlike the Department of Finance, reluctant to criticise the government's economic policies too loudly?

Even if the working paper was, as the ESRI claims, the product of flawed analysis, its speedy withdrawal will inevitably have provided further ammunition to the organisation's critics.

This makes it vital that the ESRI makes a full and speedy disclosure of the alleged flaws that led to the withdrawal of the working paper yesterday. We also need to know why it seemingly took the ESRI so long to identify these alleged flaws.

What sort of quality control does the ESRI practice before allowing reports and working papers to be issued in its name?

It is only when we get credible answers to these questions that the ESRI can begin to repair the damage which yesterday's events have inflicted upon its reputation.

Irish Independent